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 2024–25 is based on actual results as at November 30, 2024 and on forecasts for the remainder of the fiscal year. Planned results for fiscal year 2025–26 are based on reasonable accounting estimates.

The main assumptions underlying the planned results are as follows:

1. FINTRAC's activities will remain substantially the same as for the previous year.
2. 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.
3. Forecasted year end information for 2024–25 year end issued as the opening position for the 2025–26 planned results.

The Financial Transactions and Reports Analysis Centre of Canada Assessment of Expenses Regulations came into force on April 1, 2024, at which time FINTRAC began recovering the annual cost of its Compliance program from prescribed reporting entities through the method set out in those Regulations. This resulted in a shift from voted authorities to statutory authorities, impacting financial reporting presentation as of 2024–25.

These assumptions are made as at November 30, 2024.

2. Variations and changes to the forecast financial information

Although every attempt has been made to forecast final results for the remainder of 2024–25 and for 2025–26, 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 implementation of wage increases based on public sector collective bargaining;
• Economic conditions, which may affect both the amount of revenue earned and the collectability of administrative monetary penalties; and
• Other changes to the operating budget, such as new initiatives or technical adjustments.

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.

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 2024–25, 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 are generally recorded when goods are received or services are rendered and include expenses related to personnel, professional and special services, repair and maintenance, utilities, materials and supplies, as well as amortization of tangible capital assets. Provisions to reflect changes in the value of assets or liabilities, such as provisions for bad debts, loans, investments and advances and inventory obsolescence, as well as utilization of inventories and prepaid expenses, and other are also included in expenses.

b) Revenues

Revenues from assessments

Revenue from federally regulated reporting entities is 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 as a reduction of the entity's gross revenues.

4. Parliamentary authorities

FINTRAC recovers its Compliance program costs through assessments against prescribed from federally regulated reporting entities. In addition to revenues from assessments, FINTRAC is financed by the Government of Canada through parliamentary authorities for its Intelligence program.

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: