Future-oriented statement of operations

Authority and purpose

The Canadian Grain Commission (CGC) Revolving Fund (“the Revolving Fund” or “the Fund”) derives its authority from the Canada Grain Act (CGA). The CGC's mandate, as set out in the Act, is to, “in the interest of grain producers, establish and maintain standards of quality for Canadian grain and regulate grain handling in Canada, to ensure a dependable commodity for domestic and export markets.” The CGC’s vision is: “To be a world class, science-based quality assurance provider”. The Minister of Agriculture and Agri-Food is responsible for the CGC.

To achieve its mandate effectively, the CGC implemented the Departmental Results Framework (DRF) and Program Inventory (PI) as required by Policy on Results, effective April 1, 2018. Through this framework, the CGC regulates grain handling in Canada and establishes and maintains science based standards for Canadian grain. The results of this core responsibility are that domestic and international markets regard Canadian grain as dependable and safe and that farmers are fairly compensated for their grain. The CGC has three programs: Grain Quality, Grain Research, and Safeguards for Grain Farmers. Internal Services supports the core responsibility.

The Appropriation Act No. 6, 1994-1995 established the CGC’s Revolving Fund. The Fund has a continuing non-lapsing authority from Parliament to make payments out of the Consolidated Revenue Fund for working capital, capital acquisitions and temporary financing of accumulated operating deficits and draw down authority of $2,000,000.

The CGC has informed Treasury Board of plans to access its net authority provided for 2019-20 through the Annual Reference Level Update and Business Plan.

Funding for fiscal years 2018-19 and 2019-20 includes a combination of an ongoing appropriation and authority to re-spend revenues collected from fees. The CGC recovers approximately 92% of its costs through fees.

In accordance with the Government’s policy on self-insurance, the CGC does not carry its own insurance. The CGC is not subject to income tax.

Methodology and significant assumptions

The Future-Oriented Statement of Operations has been prepared based on the government priorities and plans as described in the 2019-20 Departmental Plan.

The information in the forecast results for fiscal year 2018-19 is based on projected expenditures to March 31, 2019, taking into consideration increases to grain volumes, and reduced and eliminated fees as compared to the service fee costing framework. The CGC has forecasted the planned results for the 2019-20 fiscal year.

The main assumptions underlying the forecasts are as follows:

  • Fiscal year 2019-20 reflects revenues and expenditures based on the CGC’s 2019-20 Departmental Plan. CGC programs and services for 2019-20 remain substantially the same as 2018-19. Additional expenditures to support the surplus investment framework enhancements to the Harvest Sample Program are expected for 2018-19 through to 2022-23.
  • On August 1, 2017, reduced fees for official inspection and weighing came into effect, 8 months earlier than the end of the current fee cycle. The early reduction was implemented to mitigate the risk of further accumulation of surplus funds. The CGC updated remaining fees for April 1, 2018 to better align revenues and costs, and to factor in projected increases in grain volumes inspected and weighed by the CGC. Additionally, the CGC revised the annual grain volume projection to 34.405 million metric tonnes.
  • Beginning in 2019-20, all CGC fees will adjust annually for inflation, based on the April All-items Consumer Price Index for Canada for the previous fiscal year, on April 1 to be consistent with the Service Fees Act (SFA). Adjusting fees in this manner is consistent with what other Government departments will be required to do under the SFA. Although the consumer price index varies from year to year, the average is within acceptable limits, and the annual increase will limit the need for CGC fee amendments going forward. The annual increase will sustain service standards for grain quality, quantity and safety assurance, producer protection and grain transaction integrity. The CGC’s fees will increase by 2.2% for 2019-20.
  • 2018-19 forecasted revenues are based on 38.720 million metric tonnes, which is based on actual grain volumes handled from April 2018 through to December 2018, and volume projections for January 2019 to March 2019.
  • The CGC is currently working to address infrastructure renewal requirements to ensure the continued viability of the CGC. This includes determining the approach to a major refit of the CGC’s Grain Research Laboratory space and base building systems; investment in information technology; terminal elevator office upgrades, and reconfiguration of leased spaces to ensure that the organization has the required infrastructure to deliver all programs and services and enhance client service.

These assumptions were adopted as of December 31, 2018.

Variations and Changes to the Forecast Financial Information

Although attempts have been made to forecast final results for the remainder of 2018-19 and for 2019-20, actual results achieved for both years are likely to vary from the forecast information presented. This variation could be material due to a number of factors, including environmental conditions.

In preparing this Future-Oriented Statement of Operations, the CGC has made estimates and assumptions about the future. These estimates and assumptions may differ from actual results. Estimates and assumptions are evaluated and are based on experience and factors, including predictions of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the Future-Oriented Statement of Operations and the historical statement of operations include the following:

  • Economic conditions related to grain volumes may affect both the amount of revenue earned and the collectability of accounts receivable;
  • Further changes to the operating budget through additional initiatives or technical adjustments later in the year;
  • The timing and amounts of acquisitions, disposals of property, plant and equipment and timing of leasehold improvements may affect gains/losses and amortization expense; and
  • The impacts of implementation of new collective agreements.

Once the Departmental Plan is tabled in Parliament, the CGC will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. The Departmental Results Report will explain any variances.

Summary of Significant Accounting Policies

The Future-Oriented Statement of Operations has been prepared in accordance with accounting standards in the Treasury Board of Canada Secretariat Directive on Accounting Standards, which are based on Public Sector Accounting Standards and Public Sector Guidelines issued by the Public Sector Accounting Board of the Chartered Professional Accountants of Canada and the Government of Canada Accounting Handbook. The presentation and results using the stated accounting policies do not result in any significant differences from the Public Sector Accounting Standards.

Significant accounting policies are as follows:

Measurement uncertainty

The preparation of this Future-Oriented Statement of Operations, in accordance with Canadian generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts.

The principal Future-Oriented Statement of Operations components subject to measurement uncertainty include the useful life of tangible capital assets, the variability of annual grain volumes from year-to-year resulting in variable revenue from fees, and expenses for employee vacation, severance benefits and employee termination benefits. Actual results could differ from those estimated. The CGC reviews management estimates periodically. Any adjustments are recorded in the future-oriented statement of operations in the year they become known.


The CGC presents revenues on an accrual basis and are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues:

  • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year;
  • Revenues that have been received where the CGC has an obligation to other parties for the provision of goods, services or the use of assets in the future are considered as deferred revenue. The CGC recognizes these revenues in the period in which the related expenses are incurred. Deferred revenue is primarily for licensing fees which usually cover a 12-month period; and
  • The CGC accounts for other revenues in the period in which the underlying transaction or event that gave rise to the revenues takes place.


The CGC presents expenses on an accrual basis:

  • Expenses for the CGC’s operations are recorded when goods are received or services are rendered, including services provided without charge for worker’s compensation, which are recorded as expenses at its estimated cost;
  • Vacation pay and compensatory leave are accrued and expenses are recorded as the benefits are earned by employees under their respective terms of employment;
  • Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable, to the extent the future event is likely to occur and a reasonable estimate can be made; and
  • Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. The CGC amortizes tangible capital assets on a straight-line basis over the estimated useful life of the asset.

Employee future benefits

  • Employee severance benefits are accrued and expensed as benefits are earned by employees as stipulated in their collective agreements. These benefits are currently recorded through a year-end salary accrual based on a calculation of the actual severance liability owed per employee;
  • The Public Service Superannuation Act and the Supplementary Retirement Benefits Act cover CGC employees. The Government of Canada's portion of the pension cost is included in the employee benefit charge assessed against the Revolving Fund. The actual payment of the pension is made from the Public Service Superannuation and Supplementary Retirement Benefits Accounts; and
  • Current legislation does not require the CGC to make contributions for any actuarial deficiencies of the Public Service Superannuation account.

Tangible capital assets

All tangible capital assets and leasehold improvements with a cost equal to or greater than $10,000 are capitalized at their acquisition cost.

The CGC amortizes assets on a straight-line basis over their estimated useful lives, commencing in the month after acquisition, as follows:

Tangible capital assets
Scientific equipment 5 years
Office equipment and furniture 5 years
Operational equipment 10 years
Motor vehicles 5 years
Computer equipment and software 3 years
Leasehold improvements 5 years

Parliamentary Appropriations

The Government of Canada finances the CGC through a combination of an ongoing Parliamentary appropriation, authority to re-spend fees collected, accumulated surpluses from prior years and a revolving line of credit of $2,000,000.

The government-funding basis is used to recognize transactions affecting Parliamentary appropriation. The CGC bases the future-oriented statement of operations on accrual accounting. Consequently, items presented in the future-oriented statement of operations are not necessarily the same as those provided through appropriation from Parliament.

Items recognized in the future-oriented statement of operations in one year may be funded through Parliamentary authorities in prior, current, or future years. Accordingly, the CGC has different net cost of operations for the year on a government-funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

Reconciliation of net cost of operations to requested authorities (in dollars)
Forecast results
Planned results
Net cost of operations before government funding and transfers 6,023,793 4,992,130
Adjustment for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capitals assets (2,645,691) (2,645,691)
Services provided without charge by other government departments (103,824) (98,633)
Fee revenue earned but not received    
Others (prepaid, severance, interests, etc)    
Total items affecting net cost of operations but not affecting authorities 3,019,113 (2,744,324)
Adjustments for items not affecting total expenses but affecting authorities:
Acquisitions of tangible capital assets 6,373,511 3,893,683
Increase due to deferred revenue    
Others (suspense, prepaid, advances, etc.)    
Total items not affecting net cost of operations but affecting authorities 6,373,511 3,893,683
Requested authorities 9,647,789 6,141,489
Authorities requested (in dollars)
Forecast results
Planned results
Authorities requested
Vote 1: operating expenditures 5,146,991 4,846,955
Statutory amounts 4,500,798 1,294,534
Total authorities requested 9,647,789 6,141,489
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