Departmental Financial Statements 2017-2018

1.0 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, 2018 and all information contained in these statements rests with the management of Veterans Affairs Canada. 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.

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 judgement, 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 Veterans Affairs Canada's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in Veterans Affairs Canada'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 Veterans Affairs Canada; 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 effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of ICFR for the year ended March 31, 2018 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of Veterans Affairs Canada's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the department's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Deputy Minister of Veterans Affairs Canada.

The financial statements of Veterans Affairs Canada have not been audited.

Statement of Financial Position (unaudited)

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

Category	2018	2017
Liabilities
Accounts payable and accrued liabilities (Note 4)	$119,213	$112,600
Vacation pay and compensatory leave	8,887	7,099
Deferred revenue	450	450
Employee future benefits (Note 6)	10,069	11,669
Garnishments and Family Orders	0	4
Contingent liability (Note 11)	1,500	1,242
Ste. Anne's Hospital transfer liability (Note 7)	13,891	18,550
Other liabilities (Note 8)	7,421	7,322
Total gross liabilities	161,431	158,936
Liabilities held on behalf of Government
Deferred revenue	(450)	(450)
Total liabilities held on behalf of Government	(450)	(450)
Total liabilities	160,981	158,486
Financial assets
Due from the Consolidated Revenue Fund	106,418	104,300
Accounts receivable (Note 9)	41,262	34,946
Total gross financial assets	147,680	139,246
Financial assets held on behalf of Government
Accounts receivable and advances (Note 9)	0	0
Total financial assets held on behalf of Government	0	0
Total financial assets	147,680	139,246
Departmental net debt	13,301	19,240
Non-financial assets
Tangible capital assets (Note 10)	13,403	13,554
Total non-financial assets	13,403	13,554
Departmental net financial position	$102	$(5,686)

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

Statement of Operations and Departmental Net Financial Position (unaudited)

Statement of Operations and Departmental Net Financial Position (unaudited)
For the year ended March 31
(in thousands of dollars)

Category	2018 Planned Results	2018	2017
Expenses
Disability and Death Compensation	$2,857,522	$2,964,598	$2,111,654
Health Care Program and Re-establishment Services	1,141,093	1,110,647	1,111,188
Financial Support Program	569,279	555,818	359,568
Canada Remembers Program	47,250	58,543	56,126
Veterans Ombudsman	5,852	5,520	5,044
Internal Services	82,867	96,420	75,994
Expenses incurred on behalf of Government	(1,803)	(2,165)	(2,368)
Total expenses	4,702,060	4,789,381	3,717,206
Revenues
Hospital Services	0	58	28
Sale of goods and information products	0	1	5
Other	650	606	988
Revenues earned on behalf of Government	(650)	(656)	(1,004)
Total revenues	0	9	17
Net cost from continuing operations	4,702,060	4,789,372	3,717,189
Net cost of operations before government funding and transfers	4,702,606	4,789,372	3,717,189
Government funding and transfers
Net cash provided by Government of Canada		4,752,264	3,753,545
Change in due from Consolidated Revenue Fund		2,118	(7,603)
Services provided without charge by other government departments (Note 12)		40,778	38,373
Net cost of operations after government funding and transfers		(5,788)	(67,126)
Departmental net financial position - Beginning of year		(5,686)	(72,812)
Departmental net financial position - End of year		$102	$(5,686)

Segmented information (Note 13)

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

4.0 Statement of Change in Departmental Net Debt (unaudited)

Statement of Change in Departmental Net Debt (unaudited)
For the year ended March 31
(in thousands of dollars)

Category	2018	2017
Net cost of operations after government funding and transfers	(5,788)	$(67,126)
Change due to tangible capital assets
Acquisitions of tangible capital assets	0	246
Amortization of tangible capital assets	(588)	(915)
Expense of tangible capital assets adjustment	437	4,998
Total change due to tangible capital assets	(151)	4,329
Net increase in departmental net debt	(5,939)	(62,797)
Departmental net debt - Beginning of year	19,240	82,037
Departmental net debt - End of year	$13,301	$19,240

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

5.0 Statement of Cash Flows (unaudited)

Statement of Cash Flows (unaudited)
For the year ended March 31
(in thousands of dollars)

Category	2018	2017
Operating activities
Net cost of operations before government funding and transfers	$4,789,372	$3,717,189
Non-cash items:
Amortization of tangible capital assets	(588)	(915)
Services provided without charge by other government departments (Note 12)	(40,778)	(38,373)
Variations in Statement of Financial Position
Increase in accounts receivable and advances	6,339	7,530
Increase (decrease) in cash	(23)	20
Decrease (increase) in accounts payable and accrued liabilities	(6,613)	7,982
Increase in vacation pay and compensatory leave	(1,788)	(230)
Decrease in future employee benefits	1,600	8,623
Decrease (increase) in contingent liability (Note 11)	(258)	1,830
Decrease Ste Anne's Hospital transfer liability	4,659	45,890
Increase in other liabilities	(95)	(1,245)
Cash used for operating activities	4,751,827	3,748,301
Capital investment activities
Acquisitions of tangible capital assets (Note 10)	0	246
Adjustments to tangible capital assets (Note 10)	437	4,998
Cash used for capital investment activities	437	5,244
Financing activities	0	0
Net cash provided by Government of Canada	$4,752,264	$3,753,545

The accompanying notes form an integral part of these statements.

6.0 Notes to Financial Statements (unaudited) for the year ended March 31, 2018

1. Authority and objectives

The Department of Veterans Affairs was established by the Department of Veterans Affairs Act as a department under Schedule I to the Financial Administration Act.

The Veterans Affairs Portfolio consists of the Department of Veterans Affairs which reports to the Minister of Veterans Affairs and the Office of the Veterans Ombudsman which report to Parliament through the Minister of Veterans Affairs.

Veterans Affairs Canada objectives as stated in the Department of Veterans Affairs Act are the care, treatment or re-establishment in civil life of any person who served in the Canadian Armed Forces or merchant navy or in the naval, army or air forces or merchant navies of Her Majesty, of any person who has otherwise engaged in pursuits relating to war, and of any other person designated by the Governor in Council, and the care of the dependants or survivors of any person previously referred to herein.

The Department meets its responsibilities through its various programs. The Canada Remembers program ensures that Veterans and those who died in service are honoured and the memory of their sacrifices and achievements is preserved. The Health Care program and Re-establishment services provides treatment and other health-related benefits to Veterans and other eligible persons. The Disability and Death Compensation program supports Veterans and other eligible persons whose lives have been permanently affected as a result of service to their country. The Financial Support program provides income support to eligible Veterans, qualified civilians and their survivors to ensure that recipients have income which is adequate to meet their basic needs. The Office of the Veterans Ombudsman provides Veterans with an opportunity to raise awareness of their needs and concerns, and bring their issues to the attention of the Department. The Internal Services activity represents groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of the organization.

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:

1. Parliamentary authorities

   Veterans Affairs Canada is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to Veterans Affairs Canada 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 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 2017-2018 Departmental Plan. Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2017-2018 Departmental Plan.

2. Net cash provided by Government

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

3. Amounts due from or to the CRF

   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 Department is entitled to draw from the CRF without further authorities to discharge its liabilities.

4. Revenues

   Revenues are recognized in the period in the event giving rise to the revenues occurred. Revenues that have been received but not yet earned are recorded as deferred revenue on the Statement of Financial Position. This amount represents prepayments to Sainte Anne's Hospital for in-patient charges.

   Revenues that are non-respendable are not available to discharge the Department's liabilities. While the Deputy Head is expected to maintain control, he 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.

5. Expenses

   Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient.

   Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

   Services provided without charge by other government departments for accommodations, the employer's contribution to the health and dental insurance plans, legal services and workers compensation are recorded as operating expenses at their carrying value.

6. Benefit payments

   The majority of the programs administered by Veterans Affairs Canada are meant to provide future benefits for members and Veterans of the Canadian Armed Forces. As such, an actuarially determined liability and related disclosure for these future benefits are presented in the financial statements of the Government of Canada, the ultimate sponsor of these benefits. This differs from the accounting and disclosures of benefits presented in these financial statements as Veterans Affairs Canada expenses these benefits as they become due and records no accruals for future benefits. Payments of benefits made directly to beneficiaries, such as pensions and allowances for disability, death and economic support, are recorded as grants or contributions, while benefits delivered through service providers, such as certain health care benefits are recorded as operating expenses. This accounting treatment corresponds to the funding provided to the Department through parliamentary authorities.

7. Employee future benefits
   1. Pension benefits - Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan, administered by the Government. Veterans Affairs Canada's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Veterans Affairs Canada'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.
8. Accounts receivables

   Accounts receivables are recorded at cost. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts receivables to amounts that approximate their net recoverable value.

9. Non-financial assets

   The cost 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 described in Note 10. 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 immovable assets located on reserves as defined in the Indian Act, Works of art, museum collection and Crown land to which no acquisition cost is attributable; and intangible assets.

10. Contingent liabilities

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

11. Environmental liabilities and asset retirement obligations

    An environmental liability for the remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the Government is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The liability reflects the Government's best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination. When the future cash flows required to settle or otherwise extinguish a liability are estimable, predictable and expected to occur over extended future periods, a present value technique is used. The discount rate used reflects the Government's cost of borrowing, associated with the estimated number of years to complete remediation.

    Asset Retirement Obligations are the Government's best estimate of costs related to obligations associated with the retirement of tangible capital assets. A liability for an asset retirement obligation is recognized when all of the following criteria are satisfied: there is an agreement, contract, legislation, or a constructive or equitable obligation that obligates the Government to incur retirement costs in relation to a tangible capital asset, the past event or transaction giving rise to the retirement liability has occurred, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. These costs are normally capitalized and amortized over the asset's estimated useful life. If the related asset is fully amortized, the asset retirement costs are expensed. The liability reflects the present value of estimated future cash flows required to retire the assets where amounts can be reasonably estimated and is expected to be settled as the related sites, facilities or assets are removed from service. The estimated future cash flows are adjusted for inflation using a rate that is derived on the basis of Consensus forecasts and Bank of Canada historical and target inflation rates. The discount rate is a weighted average rate reflecting the Government's cost of borrowing on initial recognition and on subsequent changes to expected cash flows, which is most closely associated with the period to settlement of the obligation.

    The recorded liabilities are adjusted each year, for present value adjustments, inflation, new obligations, changes in management estimates and actual costs incurred.

    If the likelihood of the Government's responsibility is not determinable, a contingent liability is disclosed in the notes to the consolidated statements.

12. Transactions involving foreign currencies

    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 foreign currencies are translated into Canadian dollars using exchange rates in effect on March 31. Gains and losses resulting from foreign currency transactions are reported on the Statement of Operations and Departmental Net Financial Position according to the activities to which they relate.

13. 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 and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government's best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, the useful life of tangible capital assets and the liability for employee future benefits. 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.

14. Related party transactions

    Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.

    Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

    1. Services provide on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
    2. Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

3. Parliamentary authorities

Veterans Affairs Canada 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, Veterans Affairs Canada 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
(in thousands of dollars)

Category	2018	2017
Net cost of operations before government funding and transfers	$4,789,372	$3,717,189
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(588)	(915)
Services provided without charge by other government departments	(40,778)	(38,373)
Increase in vacation pay and compensatory leave	(1,788)	(230)
Decrease in employee future benefits	1,600	8,623
Expense of tangible capital assets adjustment	437	4,998
Refund of previous years' expenses	20,728	32,032
Decrease Ste. Anne's Hospital transfer liability	4,659	45,890
Decrease (increase) in contingent liability	(258)	1,830
Other	507	(481)
Total items affecting net cost of operations but not afflecting authorities	4,773,891	3,770,563
Adjustment for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets	0	246
Total items not affecting net cost of operations but affecting authorities	0	246
Current year authorities used	$4,773,891	$3,770,809

(b) Authorities provided and used
(in thousands of dollars)

Category	2018	2017
Vote 1 - Operating expenditures	$1,022,119	$1,015,906
Vote 5 - Grants and Contributions	3,867,796	2,861,462
Statutory amounts	32,622	37,063
	4,922,537	3,914,431
Less:
Unused Authorities	(148,646)	(143,622)
	(148,646)	(143,622)
Current year authorities used	$4,773,891	$3,770,809

4. Accounts payable and accrued liabilities

The following table presents details of the Department's accounts payable and accrued liabilities:

(in thousands of dollars)

Category	2018	2017
Accounts payable to other government departments and agencies	$5,699	$10,662
Accounts payable to external parties	0	369
Accrued liabilities	113,514	101,569
Total accounts payable and accrued liabilities	$119,213	$112,600

5. Environmental liabilities

Remediation of contaminated sites

The Government's "Federal Approach to Contaminated Sites" sets out a framework for management of contaminated sites using a risk-based approach. Under this approach the Government has inventoried the contaminated sites identified on federal lands, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aides in the identification of the high risk sites in order to allocate limited resources to those sites which pose the highest risk to human health and the environment.

Veterans Affairs Canada has identified 2 contaminated sites on federal land where the Department is obligated, or likely to be obligated, to the remediation of contaminated sites. These two sites identified are ground maintenance buildings located in cemeteries.

A liability has not been recorded as Veterans Affairs Canada is assessing remediation options. Veterans Affairs Canada's ongoing efforts to assess contaminated sites may result in additional environmental liabilities. Any additional liabilities will be accrued in the year in which they become known and can be reasonably estimated.

6. Employee Future Benefits

1. Pension benefits

   Veterans Affairs Canada 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 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 Veterans Affairs Canada 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 of 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 2017-2018 expense amounts to $22,098,933 ($25,682,744 in 2016-2017). For Group 1 members, the expense represents approximately 1.01 times (1.12 times for 2016-2017) the employee contributions and, for Group 2 members, approximately 1.00 times (1.08 times in 2016-2017) the employee contributions.

   Veterans Affairs Canada's responsibility with regards to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan's sponsor.

2. Severance benefits

   Severance benefits provided to the Department's 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, 2018, all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

   The changes in the obligations during the year were as follows:

   (in thousands of dollars)

   Category	2018	2017
   Accrued benefit obligation -beginning of year	$11,669	$20,292
   Expenses for the year (Note 6)	724	(302)
   Benefits paid during the year	(2,324)	(8,321)
   Accrued benefit obligation - end of year	$10,069	$11,669

7. Ste. Anne's Hospital transfer liability

The Government of Canada and the Government of Quebec signed an agreement on April 16, 2015 to transfer Ste. Anne's Hospital to the Government of Quebec. As per the terms of the agreement Ste. Anne's Hospital transferred to the Government of Quebec on April 1, 2016.

As part of the transfer, the Department agreed to make future payments estimated at $64.9 million to the Government of Quebec. In 2017-2018, $4.7 million was paid against this liability.

8. Other liabilities

Other liabilities represent funds received from parties which are to be disbursed for specified purposes. The following table presents the details of other liabilities:

(in thousands of dollars)	Balance April 1, 2017	Receipts and other credits	Payments and other charges	Balance March 31, 2018
Administered accounts	$195	$54	$34	$215
Estate fund	15	0	0	15
Veterans administration and welfare trust fund	806	614	341	1,079
Returned soldier's insurance fund	6	1	1	6
Veterans insurance fund	1,298	65	259	1,104
Restricted donations memorial fund	1	0	0	1
Restricted donations wounded warrior fund	1	0	0	1
Restricted donations Vimy Education Centre fund	5,000	0	0	5,000
Total	$7,322	$734	$635	$7,421

1. Administered accounts

   Pursuant to section 41 of the Pension Act, section 15 of the War Veterans Allowance Act, section 55 of the Veterans Treatment Regulations and section 8 of the Guardianship of Veterans Property Regulations, moneys held in these accounts include: (a) pensions, war veterans allowances and treatment allowances placed under the administration of the Department of Veterans Affairs; and, (b) benefits from other sources such as Old Age Security, Guaranteed Income Supplement or Canada Pension Plan, placed under administration with the consent of the individual. These persons have demonstrated their inability to manage their own affairs. Payments are made out of the accounts to provide food, shelter, clothing, comforts and other necessities to the individual.

2. Estates fund

   This account was established to record the proceeds from the estates of those Veterans who died while receiving hospital treatment or institutional care, and for those Veterans whose funds had been administered by the Government, in accordance with sections 5, 6 and 7 of the Veterans' Estates Regulations. Individual accounts are maintained and payments are made to beneficiaries pursuant to the appropriate legislative authority.

3. Veterans administration and welfare trust fund

   This account was established to record donations, legacies, gifts, bequests, etc., received, to be disbursed for the benefit of Veterans or their dependents under certain conditions, and for the benefit of patients in institutions, in accordance with section 9 of the Guardianship of Veterans' Property Regulations.

4. Returned soldiers' insurance fund

   This fund was established by the Returned Soldiers' Insurance Act, to provide life insurance to contributing Veterans of World War I. The account is credited with premiums and is charged with disbursements for death benefits and cash surrender values. The account is actuarially maintained and an actuarial liability adjustment as at March 31, 2017 of $766 was credited to the account during the year and was charged to expenditures. The final date on which application for this insurance could have been received was August 31, 1933.

5. Veterans insurance fund

   This fund was established by the Veterans' Insurance Act, to provide life insurance to contributing Veterans of World War II. The account is credited with premiums and is charged with disbursements for death benefits and cash surrender values. The account is actuarially maintained and an actuarial liability adjustment as at March 31, 2017 of $65,017 was credited to the account during the year and was charged to expenditures. The final date on which application for this insurance could have been received was October 31, 1968.

6. Restricted donations – Canadian Memorial

   This account was established to record directed donations for the purpose of management and maintenance of the Canadian Memorial in Green Park, London, UK.

7. Restricted donations – Wounded Warrior Fund

   This account was established to record directed donations for the purpose of providing assistance to support the pilot project designed to assist disenfranchised Veterans in crisis.

8. Restricted donations Vimy Education Centre fund

   This account was established to record directed donations for the purpose of providing assistance to the construction of a visitor education centre at the Canadian National Vimy Memorial.

9. Accounts receivable and advances

The following table presents details of the Department's accounts receivable and advances balances:

(in thousands of dollars)

Category	2018	2017
Cash	$2	$25
Receivables - external parties	27,307	26,916
Receivables - other Government departments and agencies and other receivables	20,741	15,729
Employee advances	21	46
Sub-total	48,071	42,716
Allowance for doubtful accounts on external receivables	(6,809)	(7,770)
Gross accounts receivable	41,262	34,946
Accounts receivable held on behalf of Government	0	0
Net accounts receivable	$41,262	$34,946

10. 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 are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.

The following tables present details of tangible capital assets: (in thousands of dollars)

Cost (in thousands of dollars)
Capital Asset Class	Opening balance	Acquisitions	Adjustments	Disposals and Write-Offs	Closing balance
Buildings	$6,078	$0	$0	$0	$6,078
Works and infrastructure	2,123	0	0	0	2,123
Machinery and equipment	845	0	0	112	733
Informatics	3,057	0	0	200	2,857
Motor vehicles	586	0	0	63	523
Leasehold improvements	4,035	0	0	0	4,035
Assets under construction	9,287	437	0	0	9,724
Total	$26,011	$437	$0	$375	$26,073

Accumulated Amortization (in thousands of dollars)
Capital Asset Class	Opening balance	Amortization	Adjustments	Disposals and Write-Offs	Closing balance
Buildings	$3,693	$223	$0	$0	$3,916
Works and infrastructure	1,412	61	0	0	1,473
Machinery and equipment	726	50	0	112	664
Informatics	2,979	46	0	200	2,825
Motor vehicles	563	13	0	63	513
Leasehold improvements	3,084	195	0	0	3,279
Assets under construction	0	0	0	0	0
Total	$12,457	$588	$0	$375	$12,670

Net Book Value (in thousands of dollars)

Category	2018	2017
Capital Asset Class	Net book value	Net book value
Buildings	2,162	2,385
Works and infrastructure	650	711
Machinery and equipment	69	119
Informatics	32	78
Motor vehicles	10	23
Leasehold improvements	756	951
Assets Under Construction	9,724	9,287
Total	$13,403	$13,554

11. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.

Claims and litigation

Claims have been made against Veterans Affairs Canada in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. Veterans Affairs Canada has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. As at March 31, 2018, the department has a contingent liability of $1.5 million based on the department's legal assessment of potential liability.

Veterans Affairs Canada is named as a defendant in a suit alleging that services, assistance and benefits the Canadian Force Members and former members receive under the Canadian Forces Members and Veterans Re-establishment and compensation Act, S.C. 2011, c12 (New Veterans Charter) are substantially less than that which they would receive under either the Pension Act, through Court proceedings or under the various workers' compensation programs. The outcome of this claim is not determinable at this time. The potential financial impact of this case cannot be estimated but could be significant. No accrual for this contingency has been made in the financial statements.

12. Related party transactions

Veterans Affairs Canada is related as a result of common ownership to all government departments, agencies and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

Veterans Affairs Canada enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, Veterans Affairs Canada received common services which were obtained without charge from other government departments as disclosed below.

1. a) Common services provided without charge by other government departments

   During the year, Veterans Affairs Canada received services without charge from certain common service organizations, related to accommodation, legal services, employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded at the carrying value in the Department's Statement of Operations and Departmental Net Financial Position as follows:

   (in thousands of dollars)

   Category	2018	2017
   Accommodation	$19,761	$19,374
   Employer's contribution to the health and dental insurance plans	20,214	17,925
   Legal services	519	732
   Workers' compensation	284	342
   Total	$40,778	$38,373

   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 the Department's Statement of Operations and Departmental Net Financial Position.

2. (b) Other transactions with other government departments and agencies

   (in thousands of dollars)

   Category	2018	2017
   Accounts Receivable - Other governement departments and agencies	$18,344	$13,757
   Accounts Payable - Other governement departments and agencies	5,699	10,662
   Expenses - Other government departments and agencies	18,371	18,306
   Revenues - Other government departments and agencies	0	0

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

13. Segmented information

Presentation by segment is based on the Department's core responsibility. 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 revenue generated for the main core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows: