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2013-2014 Financial Statements [PDF 1140 KB]

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2014 and all information contained in these statements rests with the management of the National Energy Board (NEB). These financial statements have been prepared by management using the Government’s accounting policies, which are based on Canadian public sector accounting standards.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the NEB’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the NEB’s Departmental Performance Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting (ICFR) designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the NEB and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

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

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

In the interim, the NEB has undertaken a risk-based assessment of the system of ICFR for the year ended March 31, 2014, in accordance with the Treasury Board Policy on Internal Control, and the results and action plan is summarized in the annex.

The Office of the Auditor General, the independent auditor for the Government of Canada, has expressed an opinion on the fair presentation of the financial statements of the NEB which does not include an audit opinion on the annual assessment of the effectiveness of the department’s internal controls over financial reporting.

______________________________
Lyne Mercier, Acting Chair and CEO

Calgary, Canada
19 June 2014

______________________________

Ed Jansen, CA, Chief Financial Officer

 

Statement of Financial Position
As at March 31

(in thousands of dollars)
  2014 2013
Liabilities
Accounts payable and accrued liabilities (Note 4) 9,137 9,529
Due to Consolidated Revenue Fund 210 236
Other Payables (Note 5) - 598
Vacation pay and compensatory leave 3,360 2,812
Employee future benefits (Note 6) 7,190 7,221
Total net liabilities 19,897 20,396
 
Financial assets
Due from Consolidated Revenue Fund 9,137 9,529
Accounts receivable and advances (Note 7) 43,592 32,217
Total gross financial assets 52,729 41,746
 
Financial assets held on behalf of Government
Accounts receivable and advances (Note 7) (43,382) (31,981)
Total financial assets held on behalf of Government (43,382) (31,981)
Total net financial assets 9,347 9,765
Net debt 10,550 10,631
 
Non-financial assets
Prepaid expenses 448 623
Tangible capital assets (Note 8) 15,389 6,897
Total non-financial assets 15,837 7,520
Net financial position 5,287 (3,111)
Contractual obligations and contingent liabilities (Note 9)
The accompanying notes and Schedule A form an integral part of these financial statements

 

______________________________
Lyne Mercier, Acting Chair and CEO
Calgary, Canada
19 June 2014

______________________________
Ed Jansen, CA, Chief Financial Officer

 

Statement of Operations and Net Financial Position
For the Year Ended March 31

(in thousands of dollars)
  2014 2014 2013
  Planned
Results
Note 2(a)
   
Expenses (Note 11)
Energy Regulation 44,789 56,887 52,534
Energy Information 8,954 7,183 5,914
Internal Services 22,333 18,080 19,613
Total Expenses 76,076 82,150 78,061
 
Revenues (Note 11)
Regulatory Revenue 69,793 79,577 70,193
Miscellaneous Revenue 20 14 16
Revenues earned on behalf of Government (69,813) (79,591) (70,209)
Total Revenues - - -
 
Net cost of operations before government funding and transfers (transfers (Note 3a and Note 11) 76,076 82,150 78,061
 
Government funding and transfers
Cash provided by (to) Government 69,931 81,718 83,185
Change in due from the Consolidated Revenue Fund (3,075) (366) 2,260
Services provided without charge from other government departments (Note 3a and Note 10) 9,087 9,196 8,651
 
Net cost of operations after government funding and transfers 133 (8,398) (16,035)
Net financial position - Beginning of year (3,833) (3,111) (19,146)
 
Net financial position - End of year (3,966) 5,287 (3,111)
Segmented information (Note 11)
The accompanying notes and Schedule A form an integral part of these financial statements.

 

Statement of Change in Net Debt
For the Year Ended March 31

(in thousands of dollars)
  2014 2014 2013
  Planned
Results
Note 2(a)
   
Net cost of operations after government funding and transfers 133 (8,398) (16,035)
Change due to tangible capital assets
Acquisition of tangible capital assets (Note 8) 2,331 10,301 2,653
Amortization of tangible capital assets (Note 3a, Note 8 and Note 11) (2,129) (1,809) (2,129)
Net (loss) or gain on disposal of tangible capital assets     (281)
Total change due to tangible capital assets 202 8,492 243
Change due to prepaid expenses (62) (175) (440)
Net increase (decrease) in net debt 273 (81) (15,352)
Net debt - Beginning of year 9,799 10,631 25,983
Net debt - End of year 10,072 10,550 10,631
The accompanying notes and Schedule A form an integral part of these financial statements

 

Statement of Cash Flows
For the Year Ended March 31

(in thousands of dollars)
  2014 2013
Operating activities    
Net cost of operations before government funding and transfers 82,150 78,061
Non-cash items:
Amortization of tangible capital assets (1,809) (2,129)
Gain (loss) on disposal of tangible capital assets   (281)
Services provided without charge by other government departments (Note 10) (9,196) (8,651)
 
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivables and advances (26) 4
Increase (decrease) in prepaid expenses (175) 440
Decrease (increase) in accounts payables and accrued liabilities 392 (2,264)
Decrease (increase) in other payables 598 15,102
Decrease (increase) in vacation pay and compensatory leave (548) (375)
Decrease (increase) in future employee benefits 31 625
Cash used in (provided by) operating activities 71,417 80,532
 
Capital investing activities
Acquisitions of tangible capital assets 10,301 2,653
Cash used in investing activities 10,301 2,653
Net cash provided by (to) Government of Canada 81,718 83,185
The accompanying notes and Schedule A form an integral part of these financial statements

Notes to the Financial Statements
For the Year Ended March 31

1. Authority and objectives

The National Energy Board (NEB or the Board) is an independent federal regulator established in 1959 to promote safety and security, environmental protection and economic efficiency in the Canadian public interest for the regulation of pipelines, energy development and trade. The Board reports to Parliament through the Minister of Natural Resources. The NEB was established under the National Energy Board Act (NEB Act) and is designated as a department and named under Schedule I.1 of the Financial Administration Act.

The Board's responsibilities can be framed into the following program activity architecture which is also the basis for its segmented Statement of Operations:

  • Energy Regulation
    The Board’s responsibilities include regulating the construction and operation of interprovincial and international oil and gas pipelines, international power lines, and designated interprovincial power lines. The Board also regulates the tolls and tariffs of the pipelines under its jurisdiction as well as the export of natural gas, oil, natural gas liquids and electricity, and the import of natural gas. Additionally, the Board regulates oil and gas exploration and development on frontier lands and offshore areas not covered by provincial or federal management agreements.
  • Energy Information
    The Board monitors aspects of energy supply, demand, production, development and trade of all energy commodities that fall within the jurisdiction of the federal government. The Board publishes periodic assessments of Canadian supply and demand of energy and natural gas markets to inform Canadians on trends, events and issues which may affect Canadian energy markets.
  • Internal Services
    The Board ensures that it has the capacity to deliver on its mandate by its commitment to enhancing its organizational performance by developing, nurturing and maintaining expertise in its people strategy.

The NEB is an independent, federal, quasi-judicial regulatory tribunal guided by the principles of natural justice and procedural fairness. The Board is a court of record and has certain powers of a superior court with respect to the attendance, swearing and examination of witnesses; the production and inspection of documents; the enforcement of its orders; the entry on and inspection of property; and other matters necessary or proper for the due exercise of its jurisdiction. Aside from rare exceptions, the Board's regulatory decisions and the accompanying Reasons for Decision are issued as public documents.

The financial statements of the National Energy Board have been prepared as at March 31 which corresponds with the Board’s year-end. Prior to 2014, the Board had issued financial statements as at December 31 in conjunction with its calculation and allocation of recoverable costs performed on a calendar year basis in accordance with the NEB Cost Recovery Regulations. Cost recovery calculations performed on a calendar year basis are included in a Schedule to these financial statements.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government’s accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

  • Parliamentary authorities

    The NEB is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the NEB do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Net Financial Position and the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations, the Net Financial Position and the Statement of Change in Net Debt are the amounts reported in the future-oriented financial statements included in the 2013-2014 Report on Plans and Priorities.

    Liquidity risk is the risk that the Board will encounter difficulty in meeting its obligations associated with financial liabilities. The NEB’s objective for managing liquidity risk is to manage operations and cash expenditures within the appropriation authorized by Parliament or allotment limits approved by the Treasury Board.

    Each year, the Board presents information on planned expenditures to Parliament through the tabling of Estimates publications. These estimates result in the introduction of supply bills (which, once passed into legislation, become appropriation acts) in accordance with the reporting cycle for government expenditures. The Board exercises expenditure initiation processes such that unencumbered balances of budget allotments and appropriations are monitored and reported on a regular basis to help ensure sufficient authority remains for the entire period and appropriations are not exceeded.

    Consistent with Section 32 of the Financial Administration Act, the Board’s policy to manage liquidity risk is that no contract or other arrangement providing for a payment shall be entered into with respect to any program for which there is an appropriation by Parliament or an item included in estimates then before the House of Commons to which the payment will be charged unless there is a sufficient unencumbered balance available out of the appropriation or item to discharge any debt that, under the contract or other arrangement, will be incurred during the fiscal year in which the contract or other arrangement is entered into.

    The NEB’s risk exposure and its objectives, policies and processes to manage and measure this risk did not change significantly from the prior year.
  • Net cash provided by (to) Government

    The NEB operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the NEB is deposited to the CRF and all cash disbursements made by the NEB are paid from the CRF. The net cash provided by/to Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.
  • Amounts due from or to the Consolidated Revenue Fund

    Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the NEB is entitled to draw from the CRF without further authorities to discharge its liabilities. This amount is not considered to be a financial instrument.
  • Revenues:
    • The NEB has the authority to charge those companies that it regulates, in accordance with sub-section 24.1 of the NEB Act, the costs attributable to the NEB’s operations in carrying out its responsibilities. Under the National Energy Board Cost Recovery Regulations (Regulations) approved by Treasury Board, effective January 1, 1991, the NEB recovers, from the companies that it regulates, the cost of its operations. Revenues from regulatory levies are recognized in the accounts when they are invoiced and, in accordance with the Regulations, are based on the estimated cost of operations for the calendar year, with a billing adjustment to actual costs once the costs are known. Actual costs are defined as the sum of one-quarter of year 1 audited fiscal costs (January to March) and three-quarters of year 2 audited fiscal costs (April to December). The recoverable costs for a given calendar year are allocated to the oil, gas and electricity commodities proportionately on the basis of the actual time spent by Board members and employees during the preceding fiscal year (April 1 to March 31).
    • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
    • Revenues are non-respendable and are not available to discharge the NEB’s liabilities. While the Chair is expected to maintain accounting control, he or she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity’s gross revenues.
  • Expenses

    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.
    • Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, and legal and audit services are recorded as operating expenses at their estimated cost. These estimated amounts for services received without charge are recoverable costs under the Regulations.
    • Expenditures of the Board that are excluded from Cost Recovery Regulations are those expenditures related to the regulation of, exploration for, and the development of oil and gas on frontier lands and offshore areas and are disclosed im Schedule A.
    • Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program.
  • Employee future benefits
    • Pension benefits: Eligible employees participate in the Public Service Pension Plan (Plan), a multiemployer pension plan administered by the Government of Canada. The NEB contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The NEB’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.
    • Severance benefits: Certain employees are entitled to severance benefits under labour contracts or conditions of employment and these benefits are earned as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarilly determined liability for employee severance benefits for the Government as a whole.
  • Accounts receivable

    Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for receivables where recovery is considered uncertain. In addition, a distinction is made between financial assets that are available to discharge the NEB’s liabilities versus the ones that are not. Accounts receivable that pertain to non-respendable revenues earned on behalf of government are considered to be held on behalf of the Government of Canada and are therefore presented in the Statement of Financial Position as a reduction of the entity’s gross financial assets. Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The NEB is not exposed to significant credit risk. The NEB provides services to other government departments and agencies and to external parties in the normal course of business. Accounts receivable are due on demand and there is minimal potential risk of loss. The maximum exposure the NEB has to credit risk equal to the carrying value of its accounts receivables.
  • Contingent liabilities

    Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
  • Tangible capital assets

    All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more per unit, per bundle or purchased in bulk, are recorded at their acquisition cost.

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

    Asset class and amortization period
    Asset class Amortization period
    Informatics hardware:
    PCs and accessories 3 years
    Computer servers & accessories 5 years
    Informatics software
    Commercial software 2 years
    In-house developed software 5 years
    Equipment 5 years
    Furniture 10 years
    Vehicles 5 years
    Leasehold improvements Lesser of the remaining term of the lease
    or useful life of the improvement

    Tangible capital assets under development are recorded as assets under development and amortized when they become available for use.
  • Measurement uncertainty

    The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses 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 recoverable operating costs, contingent liabilities, the liability for employee future benefits, allowance for doubtful accounts and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary authorities

The NEB receives most of its funding through annual parliamentary authorities. The majority of these expenditures are subsequently recovered from the companies regulated by the NEB and the funds are deposited in the Consolidated Revenue Fund of the Government of Canada. Items recognized in the Statement of Operations and Net Financial Position and the Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the NEB has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year authorities used:
  2014 2013
  (in thousands of dollars)
Net cost of operations before government funding and transfers 82,150 78,061
Adjustments for items affecting net cost of operations
but not affecting authorities:
Services provided without charge
by other government departments (Note 10)
(9,196) (8,651)
Amortization of tangible capital assets (1,809) (2,129)
Gain (loss) on disposal of tangible capital assets - (281)
Increase in vacation pay and compensatory leave (548) (375)
Decrease (increase) in employee future benefits 31 625
Refund of prior years’ expenditures 103 60
Other - accrual for collective agreement 826 (857)
Total items affecting net cost of operations but not affecting authorities (10,593) (11,608)
 
Adjustments for items not affecting net cost of operations
but not affecting authorities
Acquisitions of tangible capital assets 10,301 2,653
Increase (decrease) in prepaid expenses (175) 440
Total items not affecting net cost of operations but affecting authorities 10,126 3,093
Current year authorities used 81,683 69,546

 

(b) Authorities provided and used
  2014 2013
  (in thousands of dollars)
Vote 25 - Program expenditures 77,903 66,897
Statutory amounts 8,397 7,548
Less:
Lapsed appropriations: Operating (4,617) (4,899)
Current year authorities used 81,683 69,546

 

4. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are measured at cost, the majority of which are due within six months of year-end. The following table presents details of accounts payable and accrued liabilities:

4. Accounts payable and accrued liabilities
  2014 2013
  (in thousands of dollars)
Accounts payable to other government departments and agencies 1,834 1,386
Accounts payable to external parties 7,129 7,471
Total accounts payable 8,963 8,857
Accrued liabilities 174 672
Total accounts payable and accrued liabilities 9,137 9,529

5. Other Payables

Other payables represents the levies collected from newly regulated parties under Section 5.2(1) of the National Energy Board Cost Recovery Regulations. These amounts will reduce the cost recovery levies payable by other regulated parties and is included as an adjustment to billings to other regulated parties in the year after the Section 5.2(1) levies have been invoiced.

6. Employee future benefits

  • Pension benefits:

    The NEB's employees participate in the Public Service Pension Plan (Plan), which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

    Both the employees and the NEB contribute to the cost of the Plan. The 2013-14 expense amounts to $5,903,589 ($5,382,478 in 2012-13), which represents approximately 1.6 times (1.7 in 2012-13) the contributions by employees.

    The NEB's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
  • Severance benefits:

    The NEB provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded and benefits will be paid from future authorities.

    Commencing in 2012, and due to changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation and reflect management’s best estimate of these future events.

    Details of the severance benefits, measured as at March 31, are as follows:

    Severance benefits
      2014 2013
      (in thousands of dollars)
    Accrued benefit obligation, beginning of year 7,221 7,846
    Expense for the year 429 364
    Benefits paid during the year (460) (989)
    Accrued benefit obligation, end of year 7,190 7,221

7. Accounts receivable and advances

The following table presents details of the NEB’s accounts receivable and advances balances:

7. Accounts receivable and advances
  2014 2013
  (in thousands of dollars)
Receivables - External parties
Outstanding provisional billings for current year 18,673 15,187
Billing adjustments: current year 13,822 10,956
prior years (Schedule A) 10,883 5,818
Prior year’s outstanding balance 34 209
Receivables - Other government departments and agencie 159 163
Employee advances 36 72
Subtotal 43,607 32,405
 
Allowance for doubtful accounts on receivables from external parties (15) (188)
Gross accounts receivables 43,592 32,217
Accounts receivable held on behalf of Government (43,382) (31,981)
Net accounts receivables 210 236

 

8. Tangible capital assets
(in thousands of dollars)

8. Tangible capital assets - Acquisitions and Closing balance
  Cost
Capital asset class Opening balance Acquisitions Adjustments[1] Disposals & write-offs Closing balance
[1] Adjustments include assets under construction of $740,149 that were transferred to the other categories upon completion of the assets.
Informatics hardware 3,880 396     4,276
Informatics software 7,314 - 740   8,054
Machinery and equipment 1,288 53     1,341
Furniture 1,450 -     1,450
Vehicles 37 -     37
Leasehold improvements 1,786 -     1,786
Assets under development 1,341 9,852 (740)   10,453
           
Total 17,096 10,301 - - 27,397

 

Tangible capital assets - Accumulated amortization and Net Book value
  Accumulated amortization   Net book value
Capital asset class Opening balance Amortization Disposals, writeoffs & Adjustments Closing balance   2014 2013
Informatics hardware 2,333 565   2,898   1,378 1,547
Informatics software 4,777 840   5,617   2,437 2,537
Machinery and equipment 835 154   989   352 453
Furniture 548 148   696   754 902
Vehicles 15 7   22   15 22
Leasehold improvements 1,691 95   1,786   - 95
Assets under development - -   -   10,453 1,341
Total 10,199 1,809 - 12,008   15,389 6 897

 

9. Contractual obligations and contingent liabilities

  • Contractual obligations

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

    a. Contractual obligations
    (thousands of dollars) 2015 2016 2017 2018 and
    thereafter
    Total
    Vendor contracts 5,933 864 17 - 6,814
  • Claims and litigation

    Claims have been made against the NEB in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. Based on the NEB's assessment, legal proceedings for claims estimated at $4,200,000 were pending at March 31, 2014 ($4,230,000 in 2012-2013); however the outcome is undeterminable. 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 in the financial statements.

10. Related party transactions

The NEB is related as a result of common ownership to all government departments, agencies, and Crown Corporations. The NEB enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the NEB received services which were obtained without charge from other government departments as discussed below.

  • Common services provided without charge by other government departments:

    During the year the NEB received services without charge from certain common service organizations, related to accommodation, legal services and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recognized in the NEB's Statement of Operations and Net Financial Position as follows:

    a. Common services provided without charge by other government departments
      2014 2013
    (thousands of dollars)
    Accommodation 4,756 4,355
    Employer's contribution to the health and dental insurance plans 4,132 4,001
    Audit services from the Office of the Auditor General 162 153
    Payroll and banking services from Public Works and Government Services 49 47
    Legal Services 97 95
    Total 9,196 8,651

    The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge.

  • Other transactions with related parties:

    b. Other transactions with related parties
      2014 2013
      (in thousands of dollars)
    Accounts receivable - Other government departments and agencies 159 163
    Accounts payable - Other government departments and agencies 1,834 1,386
    Expenses - Other government departments and agencies 11,546 10,112

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

11. Segmented information

Presentation by segment is based on the NEB’s program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expense and by major type of revenues. The segment results for the period are as follows:

Segmented information
  2014 2013
(thousands of dollars)
  Energy Regulation Energy Information Internal Services Total Total
Transfer Payments 319 - - 319 123
Operating Expenses
Salaries and employee benefits 43,741 5,848 12,392 61,981 57,107
Accommodation 5,610 728 1,957 8,295 5,508
Professional and special services 3,517 257 2,039 5,813 7,166
Travel 1,783 136 417 2,336 3,241
Amortization (Note 8) 1,273 171 365 1,809 2,129
Communication 405 3 609 1,017 1,551
Utilities, materials and supplies 239 39 301 579 933
Other - 1 - 1 303
Total Expenses 56,887 7,183 18,080 82,150 78,061
 
Revenues
Regulatory Revenue 55,105 6,958 17,514 79,577 70,193
Miscellaneous Revenue     14 14 16
Revenue earned on behalf of Government (55,105) (6,958) (17,528) (79,591) (70,209)
Total Revenues - - - - -
Net Cost of Operations before government funding and transfers 56,887 7,183 18,080 82,150 78,061

Schedule A
Allocation of Recoverable Operating Costs
For the Year Ended March 31, 2014

In accordance with the Cost Recovery regulations recoverable operating costs are based on the expenditures for the calendar year. A calendar year is the period from January 1 to December 31. The operating costs for Calendar 2012 are from the 2012 calendar year financial statements. The 2013 recoverable operating costs are based on fiscal year 2012-2013 statements less costs already recovered from April to December 2012 plus three quarters of 2013-2014 costs. For fiscal years subsequent to 2013-2014, the recoverable expenses will be calculated using one quarter of recoverable expenses from the prior fiscal year and three quarters of recoverable expenses from the current fiscal year. The methodology used by management to determine actual costs is reviewed on a periodic basis and adjusted for significant events.

Recoverable operating costs
  2013
(calendar 2013)
2012
(calendar 2012)
  (in thousands of dollars)
January to March prorated expenses 22,270 20,658
April to December expenses - 3/4 from current fiscal year 61,612 55,791
Total calculated expenses for cost recovery purposes 83,882 76,449
Less: non-recoverable costs related to the regulation of Frontier Lands and review of Arctic safety and offshore drilling (8,052) (7,208)
Recoverable operating costs 75,830 69,241

The allocation of recoverable operating costs to the commodities is based on actual time spent by Board members, officers and employees during the 2011/12 fiscal year (2010/11 for 2012):

Allocation of Recoverable Operating Costs
    2013
(calendar 2013)
  2012
(calendar 2012)
  (in thousands of dollars)
Gas 51.3% 38,848 54.9% 37,989
Oil 43.3% 32,829 38.2% 26,459
Electricity 5.4% 4,130 6.9% 4,771
  100.0% 75,807 100.0% 69,219
Commodity pipelines   23   22
Recoverable operating costs   75,830   69,241

 

Billing Adjustment
  2013
(calendar 2013)
2012
(calendar 2012)
2011
(calendar 2011)
  (in thousands of dollars)
Recoverable operating costs (above) 75,830 69,241 65,161
Deduct: provisional billing (62,008) (58,358) (59,343)
Billing adjustment 13,822 10,883 5,818

The billing adjustment represents the difference between the provisional billing and the actual recoverable operating costs. In accordance with Section 19 of the Regulations, the billing adjustment of $13,822,000 for the current year and $10,883,000 for the prior year will be applied to the provisional billings of 2015 and 2014 respectively. The billing adjustments for 2013 and 2012 are included in the accounts receivable.

Annex to the National Energy Board Statement of Management Responsibility Including Internal Control over Financial Statements

1. Introduction

In support of an effective system of internal control, the National Energy Board (NEB) annually assesses the performance of its financial controls to ensure that:

  • Financial arrangements or contracts are entered into only when sufficient funding is available;
  • Payments for goods and services are made only when the goods or services are received or the conditions of contracts or other arrangements have been satisfied; and
  • Payments have been properly authorized

The NEB will leverage the results of the periodic core control audits performed by the Office of the Comptroller General. Below is a summary of the results of the assessment conducted during fiscal year 2013-14.

2. Assessment results during fiscal year 2013-14

For the most part, controls related to payment for goods and services and payment authority were functioning well and form an adequate basis for the department’s system of internal control. The following adjustment was made in 2013-2014 to strengthen control:

  • All employees are now required to sign an annual acknowledgement of their understanding and compliance with the Code of Conduct

3. Assessment plan

The NEB will continue to monitor the performance of its system of internal control, with a focus on the core controls related to financial transactions.

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