2012–13 Report on Plans and Priorities - Future-Oriented Financial Statements

Office of the Public Sector Integrity Commissioner of Canada

 

(Back to Report on Plans and Priorities)

Statement of Management Responsibility

The Office's management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at February 29, 2012 and reflect the plans described in the Report on Plans and Priorities.

 

Mario Dion Public Sector Integrity Commissioner of Canada

Patricia Fraser Chief Financial Officer

 

Ottawa, Canada
March 12, 2012

 

 

Future-Oriented Statement of Operations (Unaudited)

For the year ending March 31 (in dollars)	Estimated Results 2012	Planned Results 2013
Operating Expenses
Disclosure and Reprisal Management	3,900,700	4,302,021
Internal Services	2,358,155	2,444,136
Net Cost of Operations	6,258,855	6,746,157

 

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to February 29, 2012.

Segmented information (Note 12)

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

 

Future-Oriented Statement of Financial Position (Unaudited)

As at March 31 (in dollars)	Estimated Results 2012	Planned Results 2013
Assets
Financial Assets
Due from Consolidated Revenue Fund	522,652	244,463
Accounts Receivable (Note 7)	15,000	20,000
Total Financial Assets	537,652	264,463
Non-Financial Assets
Tangible Capital Assets (Note 8)	249,784	222,736
Total Non-Financial Assets	249,784	222,736
	787,436	487,199
LIABILITIES AND EQUITY OF CANADA
Liabilities
Accounts Payable and Accrued Liabilities (Note 9)	537,652	264,463
Vacation Pay and Compensatory Leave	155,000	165,000
Employee Future Benefits (Note 10)	450,000	465,000
Total Liabilities	1,142,652	894,463
Equity of Canada	(355,216)	(407,264)
	787,436	487,199

 

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to February 29, 2012.

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

 

Future-Oriented Statement of Equity of Canada (Unaudited)

For the year ending March 31 (in dollars)	Estimated Results 2012	Planned Results 2013
Equity of Canada, Beginning of Year	(523,616)	(355,216)
Net Cost of Operations	(6,258,855)	(6,746,157)
Change in Due from the Consolidated Revenue Fund	100,579	(278,189)
Net cash provided by the Government of Canada	5,724,452	6,310,911
Services provided without charge from other government departments	602,224	661,387
Equity of Canada, End of Year	(355,216)	(407,264)

 

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to February 29, 2012.

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

 

Future-Oriented Statement of Cash Flow (Unaudited)

For the year ending March 31 (in dollars)	Estimated Results 2012	Planned Results 2013
OPERATING ACTIVITIES
Net Cost of Operations	6,258,855	6,746,157
Non-Cash Items:
Amortization of Tangible Capital Assets (Note 8)	(38,681)	(62,048)
Services provided without charge from other government departments	(602,224)	(661,387)
Variations in Future-Oriented Statement of Financial Position:
Increase (decrease) in Accounts Receivable	(26,999)	5,000
Decrease (increase) in Liabilities	(47,749)	248,189
Cash used in Operating Activities	5,543,202	6,275,911
CAPITAL INVESTING ACTIVIES
Acquisitions of Tangible Capital Assets (Note 8)	181,350	35,000
Cash used in Capital Investing Activities	181,350	35,000
Net Cash Provided by Government of Canada	5,724,552	6,310,911

 

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to February 29, 2012.

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

 

Notes to the Future-Oriented Financial Statements (Unaudited)

1. Authority and Objectives

The Office of the Public Sector Integrity Commissioner of Canada (the Office) was created under the Public Servants Disclosure Protection Act, which came into force on April 15, 2007. The Office is established under the authority of Schedule I.1 of the Financial Administration Act and is funded through annual appropriations. The Commissioner is an Agent of Parliament, is accountable for, and reports directly to Parliament on results achieved.

The Office has the mandate to establish a safe, confidential mechanism for public servants or members of the public to disclose potential wrongdoing in the public sector. The Office also protects the public servants from reprisal for making such disclosures or participating in investigations.

Disclosure and Reprisal Management Program:

This program addresses the need to take action in bringing resolution to disclosures of wrongdoing and complaints of reprisal and contributes to increasing confidence in federal public institutions. It aims to provide advice to federal public sector employees and members of the public who are considering making a disclosure and to accept, investigate and report on disclosures of information concerning possible wrongdoing. Based on this activity, the Public Sector Integrity Commissioner will exercise exclusive jurisdiction over the review, conciliation and settlement of complaints of reprisal, including making applications to the Public Servants Disclosure Protection Tribunal to determine if reprisals have taken place and to order appropriate remedial and disciplinary action.

Internal Services:

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Corporate Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Significant Assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the Office as described in the Report on Plans and Priorities.

The main assumptions are as follows:

1. The Office's activities will remain substantially the same as the previous year.
2. Expenses, 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. Estimated year end information for 2011-12 is used as the opening position for the 2012-13 forecasts.

These assumptions are adopted as at February 29, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2011-12 and for 2012-13, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these financial statements the Office has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
2. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the Office will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles.

Significant accounting policies are as follows:

1. Parliamentary Authorities
   The Office is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Office 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 Future-oriented Statement of Operations and the Statement of Future-oriented Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 6 provides a reconciliation between the basis of reporting.
2. Net Cash Provided by Government
   The Office operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Office is deposited to the CRF and all cash disbursements made by the Office 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/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 the Office is entitled to draw from the CRF without further appropriations to discharge its liabilities.
4. Expenses
   Expenses are presented on an accrual basis:

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

ii.  Services provided without charge by other government departments for accommodation and the employer's contribution to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

e.  Employee Future benefits

i.  Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government of Canada. The Office's contributions to the Plan are charged to expenses in the year incurred and represent the Office's total departmental obligation to the Plan. Current legislation does not require the Office to make contributions for any actuarial deficiencies of the Plan.

ii.  Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information dervied from the results of the actuarially determined liabiltiy for employee severance benefits for the Government as a whole.

f. Accounts Receivables
Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.

g.  Tangible Capital Assets
Tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. The Office does not capitalize intangibles. Amortization of tangible capital assets is done on a staight-line basis over their estimated useful lives, once the asset is placed in operation, as follows:

Asset class	Amortization period
Informatics hardware	3 to 5 years
Informatics software	3 to 5 years
Other equipment	1 to 15 years
Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement.

5. Net Debt Indicator

Net debt is the difference between a government's liabilities and its financial assets and is meant to provide a measure of the future revenues required to pay for past transactions and events. A statement of change in net debt would show changes during the period in components such as tangible capital assets and prepaid expenses. The Office is financed by the Government of Canada through appropriations and operates within the CRF, which is administered by the Receiver General for Canada. All cash received by the Office is deposited to the CRF and all cash disbursements made by the Office are paid by the CRF. Under this government business model, assets reflected on the Office's financial statements, with the exception of the Due from the CRF, are not available to use for the purpose of discharging the existing liabilities of the Office. Future appropriations would be used to discharge existing liabilities.

(in dollars)	Estimated Results 2012	Planned Results 2013
Liabilities
Accounts payable and accrued liabilities	537,652	264,463
Vacation pay and compensatory leave	155,000	165,000
Employee future benefits	450,000	465,000
Total Liabilities	1,142,652	894,463
Financial Assets
Due from the Consolidated Revenue Fund	522,652	244,463
Accounts receivable	15,000	20,000
Total Financial Assets	537,652	264,463
Net Debt Indicator	605,000	630,000

 

6. Parliamentary Authorities

The Office receives its funding through annual Paliamentary authorities. Items recognized in the Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Office 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) Authorities requested (in dollars)	Estimated Results 2012	Planned Results 2013
Authorities requested
Vote 50	6,850,168	5,509,650
Statutory	534,960	523,072
Authorities Available	7,385,128	6,032,722
Lapse	1,550,628	-
Forecast authorities to be used	5,834,500	6,032,722

 

Forecast authorities requested for the year are the planned spending amounts which are based on the Main Estimates, Supplementary Estimates, and estimates of amounts to be allocated at year-end from Treasury Board central votes.

(b) Reconciliation of Net Cost of Operations to forecast authorities to be used (in dollars)	Estimated Results 2012	Planned Results 2013
Net Cost of Operations	6,258,855	6,746,157
Adjustments for items affecting Net Cost of Operations but not affecting authorities:
Add (Less):
Amortization of Tangible Capital Assets (Note 8)	(38,681)	(62,048)
Decrease (increase) in Employee Future Benefits	71,900	(15,000)
Increase in Vacation Pay and Compensatory Leave	(36,700)	(10,000)
Services provided without Charge by other Government Departments	(602,224)	(661,387)
	(605,705)	(748,435)
Adjustments for items not affecting Net Cost of Operations but affecting authorities:
Add (Less):
Acquisitions of Tangible Capital Assets (Note 8)	181,350	35,000
	181,350	35,000
Forecast authorities to be used	5,834,500	6,032,722

 

7. Accounts Receivable

(in dollars)	Estimated Results 2012	Planned Results 2013
Accounts Receivable
Other Government Departments	15,000	20,000
Total	15,000	20,000

 

8. Tangible Capital Assets

(in dollars)	Estimated Results 2012	Planned Results 2013
Opening balance	107,115	249,784
Acquisition of Tangible Capital Assets	181,350	35,000
Less: Current year amortization	(38,681)	(62,048)
Net Book Value	249,784	222,736

 

9. Accounts Payable and Accrued Liabilities

(in dollars)	Estimated Results 2012	Planned Results 2013
External Parties
Accounts Payable and Accrued Liabilities	430,400	182,605
Accrued Salaries	24,212	38,638
Other Government Departments
Accounts Payable	83,040	43,220
Total	537,652	264,463

 

10. Employee Future Benefits

1. Pension Benefits:
   The Office's employees participate in the Public Service Pension 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 the Commission contribute to the cost of the Plan. The forecast expenses are $381,130 in 2011-12 and $427,525 in 2012-13 representing approximately 1.9 times the contributions of employees in 2010-11.
   
   The Office'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:
   As part of collective agreement negotiations with certain employee groups, and changes to conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation. Information about the severance benefits, estimated as at the date of these statements, is as follows:

(in dollars)	Estimated Results 2012	Planned Results 2013
Accrued benefit obligation, beginning of year	521,900	450,000
Expense for the year	123,370	15,000
Expected benefits payments during the year	(195,270)	-
Accrued benefit obligation, end of year	450,000	465,000

 

11. Related Party Transactions

The Office is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Office enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Office has shared service agreements with other government departments related to the provision of Finance, Human Resources, Administration and Information Technology services. The forecast expenses are $620,405 in 2011-12 and $520,000 in 2012-13. The Office also obtained common services without charge from other Government departments as disclosed below.

Common services provided without charge by other government departments

During the year, the Office is forecasted to receive service without charge from certain common service organization related to accommodation and the employer's contribution to the health and dental insurance plans. These services without charge have been recorded in the Office's Future-oriented Statement of Operations as follows:

(in dollars)	Estimated Results 2012	Planned Results 2013
Accommodation	273,024	301,852
Employer's contributions to the health and dental insurance plans	249,200	279,535
Audit services	80,000	80,000
Total	602,224	661,387

 

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 Works and Government Services Canada are not included in the Office's Future-oriented Statement of Operations.

12. Segmented information

Presentation by segment is based on the Office's program activity architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 4. The following table presents the forecasted expenses for the main program activities, by major object of expense. The segment estimates for the period are as follows:

		2013
(in dollars)	Total 2012	Disclosure and Reprisal Management	Internal Services	Total 2013
Operating Expenses
Salaries and Employee Benefits	3,896,500	3,207,624	968,633	4,176,257
Professional and Special Services	1,422,000	512,000	1,063,000	1,575,000
Accommodation	303,024	384,774	67,078	451,852
Travel & Relocation	45,000	57,200	11,600	68,800
Information	100,000	17,000	123,000	140,000
Equipment expenses	218,650	-	-	-
Communication	75,000	11,200	66,000	77,200
Utilities, Materials and Supplies	70,000	7,000	43,000	50,000
Repairs and Maintenance	50,000	-	60,000	60,000
Amortization of tangible capital assets	38,681	54,623	7,425	62,048
Rentals	10,000	10,600	34,400	45,000
Other	30,000	40,000	-	40,000
Net Cost of Operations	6,258,855	4,302,021	2,444,136	6,746,157