​​2018-2019 Financial Statements

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, 2019, and all information contained in these statements rests with Library and Archives Canada (LAC) management. These financial statements have been prepared by management using the Government of Canada’s accounting policies, which are based on Canadian public sector accounting standards.

LAC management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information presented is based on management’s best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of LAC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in LAC’s Departmental Results 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 LAC; and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

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

LAC will be subject to periodic core control audits performed by the Office of the Comptroller General, which will use the results of such audits to adhere to the Treasury Board Policy on Financial Management.

In the interim, LAC has undertaken a risk-based assessment of the system of ICFR for the year that ended on March 31, 2019, in accordance with the Treasury Board Policy on Financial Management, and the action plan is summarized in the annex.

The financial statements of LAC have not been audited.

Statement of Financial Position (Unaudited)
As at March 31 (in thousands of dollars)

Table 1: Text equivalent

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

Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31 (in thousands of dollars)

Table 2: Text equivalent

Segmented information (note 12)
The accompanying notes form an integral part of these financial statements.

Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31 (in thousands of dollars)

Table 3: Text equivalent

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

Statement of Cash Flows (Unaudited)
For the Year Ended March 31 (in thousands of dollars)

Table 4: Text equivalent

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

Notes to the Financial Statements (Unaudited)
For the Year Ended March 31

1. Authority and objectives

(a) Description of the authority and objectives

LAC is a government institution that was established on May 21, 2004, as a result of the amalgamation of the former National Library of Canada and National Archives of Canada. LAC’s role was confirmed in the 2004 Library and Archives of Canada Act, which assigns discretionary power to the Librarian and Archivist of Canada in attaining LAC’s objectives. Pursuant to the Act, no government or ministerial record may be destroyed without the prior written consent of the Librarian and Archivist of Canada. Government records deemed to be of historical or archival importance shall be transferred to his or her care and control.

LAC is a Schedule I.1 organization within the Financial Administration Act and reports to Parliament through the Minister of Canadian Heritage. LAC’s mandate is as follows:

• to preserve the documentary heritage of Canada for the benefit of current and future generations;
• to serve as a source of enduring knowledge accessible to all, contributing to the cultural, social and economic advancement of Canada as a free and democratic society;
• to facilitate in Canada co-operation among communities involved in the acquisition, preservation and diffusion of knowledge; and
• to serve as the continuing memory of the Government of Canada and its institutions. 

(b) Description of core responsibilities

1. Acquiring and preserving documentary heritage: Library and Archives Canada (LAC) acquires documentary heritage of historical value and preserves it for current and future generations, as mandated in the Library and Archives of Canada Act. The collection is made up of documentary heritage in a variety of media and formats. LAC advises the Government of Canada and its institutions on the management of information and ensures that records of historical value are transferred to its collection. Through legal deposit, all materials submitted by Canadian publishers, and samples of Internet content, become part of the collection. Other records of national significance are acquired to document Canadian society. The institution uses state-of-the-art techniques and infrastructure to restore the collection and provide optimal conditions for long-term preservation. LAC also builds its capacity and expertise to store information digitally, to ensure the enduring availability of digital records.
2. Providing access to documentary heritage: Library and Archives Canada (LAC) provides access to its collection, while respecting legal, policy and contractual obligations. Using cutting-edge technologies, it enables Canadians to easily access and consult its collection and thereby enrich their knowledge of Canada’s documentary heritage. Through its website and social media, LAC improves access to its digital content and the whole collection. The institution provides online and in-person services at its four national service points. It uses innovative strategies such as crowdsourcing (with Co-Lab and Digi-Lab) to increase the digital content of its collection. LAC also promotes Canadian heritage by creating or contributing to exhibitions that enable the public to discover its collection in cultural sites across Canada. Through the Documentary Heritage Communities Program, LAC supports Canada’s documentary heritage organizations by increasing their capacity to preserve and make their collections accessible.
3. Internal services: Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs, and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct service categories: Management and Oversight, Communications, Legal Services, Human Resources and Security Management, Financial Management, Information Management, Information Technology, Real Property, Materiel Management, and Acquisition Services.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government of Canada’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:

(a) Parliamentary authorities

LAC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to LAC does not parallel financial reporting according to generally accepted accounting principles, since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2018-2019 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position or in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2018-2019 Departmental Plan.

(b) Net cash provided by the Government

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

(c) Amounts due from/to the CRF

Amounts due from/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 LAC is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Revenues

1. Sales of goods and information products are revenues from regulatory fees and are recognized in the accounts based on the services provided in the year.
2. Funds received from external parties for specified purposes are recorded upon receipt as deferred revenues. These revenues are recognized in the period in which the related expenses are incurred.
3. Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.
4. Revenues that are non-respendable are not available to discharge LAC’s liabilities. While the Deputy Head is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, these 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.

(e) Expenses

Expenses are recorded on the accrual basis:

1. 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. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
2. Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.
3. Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, and workers’ compensation are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government. LAC’s contributions to the Plan are charged to expenses in the year incurred and represent the total obligation to the Plan. LAC’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.
2. Severance benefits: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits 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 receivable and advances

Accounts receivable and advances are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for receivables where recovery is considered uncertain.

(h) Non-financial assets

The costs of acquiring land, buildings, equipment and other capital property are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in note 8. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include works of art, museum collection and Crown land to which no acquisition cost is attributable, and intangible assets.

(i) Contingent liabilities

Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur, 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.

(j) Foreign currency transactions

Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars using the rate of exchange in effect at year-end. Gains and losses resulting from foreign currency transactions are included in Other items within Segmented information (note 12).

(k) Collections

LAC’s collections are presented in the Statement of Financial Position at a nominal value of $1,000. Items purchased for the collections are recorded as an expense in the year of acquisition. Items collected from the federal government are not recorded in the Statement of Financial Position.

(l) 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 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 future benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management’s estimates are reviewed periodically, and as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary authorities

LAC receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, LAC 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.

Table 5: Text equivalent

Table 6: Text equivalent

4. Accounts payable and accrued liabilities

Table 7: Text equivalent

5. Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming from amounts received from external parties that are restricted in order to fund the expenditures related to specific research projects and stemming from amounts received for fees prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed. Details of the transactions related to this account are as follows:

Table 8: Text equivalent

6. Employee future benefits

(a) Pension benefits

LAC’s employees participate in the Public Service Pension Plan (the 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 two percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plan benefits, and they are indexed to inflation.

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

The 2018–2019 expense amounts to $7,605,382 ($7,403,123 in 2017–2018). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2017–2018) the employee contributions, and for Group 2 members, approximately 1.00 times (1.00 times in 2017–2018) the employee contributions.

LAC’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

Severance benefits provided to LAC employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2019, all settlements for immediate cash-out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

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

Table 9: Text equivalent

7. Accounts receivable and advances

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

Table 10: Text equivalent

8. Tangible capital assets

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

Assets under construction and software under development are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

Table 12: Text equivalent

Table 13: Text equivalent

1. Adjustments include assets under construction of $5,704,120 transferred to other categories upon completion of the assets.

9. Collections

LAC preserves Canada’s documentary heritage and serves as the continuing memory of the Government of Canada, thereby contributing to the country’s cultural, social and economic advancement as a free and democratic society.

While the nominal valuation attributed to the collections in these financial statements is aligned with Canadian public sector reporting standards, this is not representative of the historical or market value of the collection. Although not capitalized like other assets, such as buildings or equipment, these irreplaceable treasures have inestimable legal, evidentiary, cultural and monetary value for Canadians. These include documentary material transferred at no charge from government departments, publications received through legal deposit, materials purchased, and donated materials for which receipts for tax purposes may have been issued.

10. Related party transactions

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

(a) Common services provided without charge by other government departments

During the year, LAC received services without charge from certain common service organizations, related to the accommodation for its office space and the employer’s contribution to the health and dental insurance plans. These services, provided without charge, have been recorded in LAC’s Statement of Operations as follows:

Table 14: Text equivalent

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Services and Procurement Canada and audit services provided by the Office of the Auditor General, are not included in LAC’s Statement of Operations. Similarly, LAC manages records, in all media, on behalf of 176 federal government organizations across the country.

(b) Other transactions with related parties

Table 15: Text equivalent

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

11. Transfers from/to other government departments

Table 16: Text equivalent

12. Segmented information

Presentation by segment is based on LAC’s Departmental Results Framework. The presentation by segment is based on the accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues yielded for the main programs, by major object of expense and by major type of revenue. The segment results for the period are as follows: