Future-Oriented Statement of Operations of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)

Unaudited

For the Year Ending March 31

The accompanying notes form an integral part of this Future-Oriented Statement of Operations.

1. Methodology and significant assumptions

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

The information in the Forecast results for fiscal year 2023–24 are based on actual results as at November 30, 2023 and on forecasts for the remainder of the fiscal year. Planned results for fiscal year 2024–25 are based on reasonable accounting estimates.

The main assumptions underlying the planned results are as follows:

• Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
• Forecast results of 2023–24 year end information are used as the opening position for the 2024–25 planned results.

These assumptions are made as at November 30, 2023.

Note: The financial reporting presentation has changed as of 2024–25 due to the transition to a mixed funding model (appropriation and cost recovery).

2. Variations and changes to the forecast financial information

The Financial Transactions and Reports Analysis Centre of Canada Assessment of Expenses Regulations will come into force on April 1, 2024, at which time FINTRAC will recover the annual cost of its Compliance function from prescribed reporting entities through the method set out in those Regulations.

Although every attempt has been made to forecast final results for the remainder of 2023–24 and for 2024–25, actual results achieved for both years are likely to differ from the forecast information presented, and this variation could be material.

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

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

• The timing and amount of acquisitions and disposals of property, plant and equipment which may affect gains, losses and amortization expense;
• The potential wage increases based on public sector collective bargaining;
• Other changes to the operating budget, such as new initiatives or technical adjustments later in the fiscal year; and
• Changes in administrative monetary penalties levied.

After the Departmental Plan is tabled in Parliament, FINTRAC will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

Note: FINTRAC has refined its program allocation methodology starting in fiscal year 2024–25 in order to include the attribution of applicable direct and indirect costs that were previously captured under the Internal Services category to programs. The forecast amount for Compliance forms the basis for the interim assessments to be recovered from reporting entities, with final assessments being determined after the fiscal year is complete.

3. Summary of significant accounting policies

The Future-Oriented Statement of Operations has been prepared using the Government of Canada’s accounting policies in effect for fiscal year 2023–24, and is 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) Expenses

Expenses are recorded on an accrual basis. Expenses for FINTRAC’s operations are recorded when goods are received or services are rendered, including services provided without charges for employee contributions to health and dental insurance plans and workers’ compensation, which are recorded as expenses at their estimated cost. Vacation pay and compensatory leave, as well as severance benefits, are accrued and expenses are recorded as the benefits are earned by employees under their terms of employment.

Expenses also include provisions to reflect changes in the value of assets, including provisions for bad debt on accounts receivable or liabilities, including contingent liabilities to the extent the future event is likely to occur and a reasonable estimate can be made.

Expenses also include amortization of tangible capital assets, which are capitalized at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset.

b) Revenues

Revenues from assessments

Revenue from federally regulated Reporting Entities (REs) will be recognized based on actual costs incurred as services are typically charged based on cost recovery, and all costs are considered recoverable. Assessments are typically billed on an annual basis based on an estimate of the current fiscal year’s operating costs (an interim assessment) along with adjustments related to the final accounting of the previous year’s assessment for actual costs incurred. Differences between billed estimates and actual costs incurred at the end of the accounting period are recorded as accrued assessment revenue or unearned assessment revenue.

Revenues from administrative monetary penalties (AMPs)

Since 2008, FINTRAC has the legislative authority to issue Administrative Monetary Penalties (AMPs) to reporting entities that are in non-compliance with Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). AMPs are deemed to be non-respendable revenue. As such, this revenue cannot be used to discharge FINTRAC’s liabilities. While the Deputy Head is expected to maintain accounting control, they have no authority over the disposition of non-respendable revenues. AMPs are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.

4. Parliamentary authorities

FINTRAC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to FINTRAC differs from financial reporting according to generally accepted accounting principles because authorities are based mainly on cash flow requirements. Items recognized in the Future-Oriented Statement of Operations in one year may be funded through parliamentary authorities in prior or current fiscal years. Accordingly, FINTRAC 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: