2022–23 Departmental Results Report - Financial Statements

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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, 2023, and all information contained in these statements rests with the management of the Office of the Public Sector Integrity Commissioner of Canada (the Office). 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 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 the Office’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Office’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, directives 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 the Office 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, 2023 was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex of the 2022-23 Departmental Results Report .

The effectiveness and adequacy of the Office's system of internal control is reviewed by an independent Audit and Evaluation Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends for approval the financial statements to the Commissioner.

The Auditor General of Canada, the independent auditor for the Government of Canada, has expressed an opinion on the fair presentation of the financial statements of the Office which does not include an audit opinion on the annual assessment of the effectiveness of the Office’s internal controls over financial reporting.

Statement of Financial Position

As at March 31

(in dollars)	2023	2022
Liabilities
Accounts payable and accrued liabilities (note 4)	528,568	486,074
Vacation pay and compensatory leave	413,157	448,451
Employee future benefits (note 5)	176,500	163,400
Total liabilities	1,118,225	1,097,925
Financial assets
Due from the Consolidated Revenue Fund	461,349	430,956
Accounts receivable and advances (note 6)	83,993	72,692
Total financial assets	545,342	503,648
Net debt	572,883	594,277
Non-financial assets
Prepaid expenses	8,133	243
Tangible capital assets (note 7)	943,776	978,606
Total non-financial assets	951,909	978,849
Net financial position	379,026	384,572

Contractual obligations (note 8)

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

Statement of Operations and Net Financial Position

For the year ended March 31

(in dollars)	Planned Results (note 2) 2023	2023	2022
Expenses
Disclosure and Reprisal Management Program	4,524,988	4,206,744	4,000,336
Internal Services	2,269,307	2,308,586	2,146,437
Net cost of operations before government funding	6,794,295	6,515,330	6,146,773
Government funding
Net cash provided by Government of Canada	5,874,437	5,711,058	5,438,302
Change in due from the Consolidated Revenue Fund	32,396	30,393	(49,690)
Services provided without charge by other government departments (note 9)	786,782	768,312	767,656
Transfers of assets from other government departments	0	21	3,550
Net cost (revenue) of operations after government funding	100,680	5,546	(13,045)
Net financial position - Beginning of year	182,524	384,572	371,527
Net financial position - End of year	81,844	379,026	384,572

Segmented information (note 10)

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

Statement of Change in Net Debt 

For the year ended March 31

(in dollars)	Planned Results (note 2) 2023	2023	2022
Net cost (revenue) of operations after government funding	100,680	5,546	(13,045)
Change due to tangible capital assets
Acquisition of tangible capital assets (note 7)	80,000	223,693	207,595
Amortization of tangible capital assets (note 7)	(231,775)	(258,523)	(233,584)
Total change due to tangible capital assets	(151,775)	(34,830)	(25,989)
Change due to prepaid expenses	0	7,890	227
Net decrease in net debt	(51,095)	(21,394)	(38,807)
Net debt - Beginning of year	614,771	594,277	633,084
Net debt - End of year	563,676	572,883	594,277

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

Statement of Cash Flow

Operating activities

(in dollars)	2023	2022
Net cost of operations before government funding	6,515,330	6,146,773
Non-cash items:
Amortization of tangible capital assets (note 7)	(258,523)	(233,584)
Services provided without charge by other government departments (note 9)	(768,312)	(767,656)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances	11,301	(38,447)
Increase in prepaid expenses	7,890	227
Decrease (Increase) in accounts payable and accrued liabilities (notes 4, 7)	12,209	(31,170)
Decrease in vacation pay and compensatory leave	35,294	43,766
(Increase) in employee future benefits	(13,100)	0
Transfer of assets (from) other government departments	(21)	(3,550)
Cash used in operating activities	5,542,068	5,116,359
Capital investing activities
Acquisition of tangible capital assets (note 7)	168,990	321,943
Cash used in capital investing activities	168,990	321,943
Net cash provided by Government of Canada	5,711,058	5,438,302

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

Notes to the Financial Statements

For the year ended March 31

1. Authority and objectives

The Office of the Public Sector Integrity Commissioner of Canada (the Office) was set up to administer 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 accountable for, and reports directly to Parliament on the results achieved.

The Office is mandated to establish a safe, independent, and confidential process for public servants and members of the public to disclose potential wrongdoing in the federal public sector. The Office also helps to protect public servants who have filed disclosures or participated in related investigations from reprisal. The disclosure regime is an element of the framework which strengthens accountability and management oversight in government operations.

Disclosure and Reprisal Management Program

The objective of the program is to address disclosures of wrongdoing and complaints of reprisal and contribute 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 which determines whether reprisals have taken place and orders 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. Internal services include only those activities and resources that apply across an organization, and not those provided to a specific program. The groups of activities are Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Management Services; Materiel Management Services and Acquisition Management 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

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 Statement of Operations and 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 section of the Statement of Operations and Net Financial Position are the amounts reported in the Future-Oriented Statement of Operations included in the 2022 -23 Departmental Plan. The planned results amounts in the Government funding section of the Statement of Operations and Net Financial Position and in the Statement of Change in Net Debt were prepared for internal management purposes and have not been previously published.

Liquidity risk is the risk that the Office will encounter difficulty in meeting its obligations associated with financial liabilities. The Office’s objective for managing liquidity risk is to manage operations and cash expenditures within the appropriation authorized by Parliament or allotment limits approved by the Treasury Board.

Each year, the Office presents information on planned expenditures to Parliament through the tabling of Estimates publications. These estimates result in the introduction of supply bills (which, once passed into legislation, become appropriation acts) in accordance with the reporting cycle for government expenditures. The Office exercises expenditure initiation processes such that unencumbered balances of budget allotments and appropriations are monitored and reported on a regular basis to help ensure sufficient authority remains for the entire period and appropriations are not exceeded.

Consistent with Section 32 of the Financial Administration Act, the Office’s policy to manage liquidity risk is that no contract or other arrangement providing for a payment shall be entered into with respect to any program for which there is an appropriation by Parliament or an item included in estimates then before the House of Commons to which the payment will be charged unless there is a sufficient unencumbered balance available out of the appropriation or item to discharge any debt that, under the contract or other arrangement, will be incurred during the fiscal year in which the contract or other arrangement is entered into.

The Office’s risk exposure and its objectives, policies and processes to manage and measure this risk did not change significantly from the prior year.

b) Net Cash Provided by Government of Canada

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 of Canada is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government of Canada.

c) Due from the Consolidated Revenue Fund

Amounts due from 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 authorities to discharge its liabilities.

d) Expenses

Expenses are recorded on the accrual basis:

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

e) Employee future benefits

• Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer 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 total Office obligation to the Plan. 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.
• Severance benefits: The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. Due to the size of the Office, the remaining obligation for employees who did not withdraw benefits is calculated using employee specific information.

f) Accounts receivable

Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain. Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Office is not exposed to significant credit risk. Accounts receivable are due on demand. The majority of accounts receivable are due from other Government of Canada departments and organizations where there is minimal potential risk of loss. The maximum exposure the Office has to credit risk is equal to the carrying value of its accounts receivable.

g) Tangible capital assets

All tangible capital assets and leasehold improvements are recorded at their acquisition cost. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

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

h) Related Party Transactions

Inter-entity transactions
The Office is related, in terms of common ownership, to all government departments, organizations, and Crown corporations. The Office enters into transactions with these entities in the normal course of business, which are measured at the carrying amount, except for the following:

1. Inter-entity transactions are measured at the exchange amount when undertaken on similar terms and conditions to those adopted if the entities were dealing at arm’s length, or where costs provided are recovered.
2. Goods or services received without charge between commonly controlled entities, when used in the normal course of the operations and would otherwise have been purchased, are recorded as revenues and expenses at the carrying amount.The Government also 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 are not included in the Office’s Statement of Operations and Net Financial Position.

Other related party transactions
Related parties also include key management personnel (KMP) having authority and responsibility for planning, directing and controlling the activities of the Office, as well as their close family members. The Office has defined its KMP to be the Commissioner, Deputy Commissioner, Chief Financial Officer, General Counsel and Director of Operations.

These related party transactions are recorded at the exchange amount.

i) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed 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 Office's best estimates of the related amount at the end of the reporting period. The most significant items where estimates are used are the liability for vacation pay and compensatory leave, 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

The Office receives its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and 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, 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) Reconciliation of net cost of operations to current year authorities used

(in dollars)	2023	2022
Net cost of operations before government funding	6,515,330	6,146,773
Adjustments for items affecting net cost of operations but not affecting authorities: Add (Less):
Services provided without charge by other government departments (note 9)	(768,312)	(767,656)
Amortization of tangible capital assets (note 7)	(258,523)	(233,584)
Decrease in vacation pay and compensatory leave	35,294	43,766
(Increase) in employee future benefits	(13,100)	0
(Increase) decrease in other amounts to be charged lat	(2,617)	27,352
Adjustments to previous year's expenses	32,186	35,795
Refund of program expenditures	0	(5,181)
	(975,072)	(899,508)
Adjustments for items not affecting net cost of operations but affecting authorities: Add (Less):
Acquisition of tangible capital assets (note 7)	223,693	207,595
Increase in prepaid expenses	7,890	227
Employee advances and overpayments	12,858	1,052
	244,441	208,874
Current year authorities used	5,784,699	5,456,139

b) Authorities provided and used

(in dollars)	2023	2022
Authorities provided:
Vote 1 - Program expenditures	5,556,784	5,346,914
Statutory amounts - Proceeds from the disposal of surplus Crown assets	0	110
Statutory amounts - Contributions to employee benefits plan	545,029	519,126
Less:
Lapsed authorities	(317,114)	(410,011)
Current year authorities used	5,784,699	5,456,139

4. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are measured at cost, the majority of which are due within three months of year-end.

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

(in dollars)	2023	2022
Other government departments and organizations	32,007	72,496
External parties	176,320	95,751
	208,327	168,247
Accrued liabilities	320,241	317,827
	528,568	486,074

5. Employee future benefits

a) Pension benefits

The Office's employees participate in the Public Service Pension Plan (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% 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 Office 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 2022-23 expense amounts to $356,067 ($350,721 in 2021-22). For Group 1 members, the expense represents approximately 1.02 times (1.01 times in 2021-22) the employee contributions and, for Group 2 members, approximately 1 time (1 time in 2021-22) the employee contributions.

The Office's responsibility with regard 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.

b) Severance benefits

Severance benefits provided to the Office’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. As at March 31, 2023, substantially all settlements for immediate cash out were completed and the remaining obligation will be disbursed upon departure from the public service. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

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

(in dollars)	2023	2022
Accrued benefit obligation, beginning of year	163,400	163,400
Expense for the year	13,100	0
Benefits paid during the year	0	0
Accrued benefit obligation, end of year	176,500	163,400

6. Accounts receivable and advances

(in dollars)	2023	2022
Accounts receivable - Other government departments and organizations	43,013	42,308
Accounts receivable - External parties	16,775	17,574
Employee advances and overpayments	24,205	12,810
	83,993	72,692

7. Tangible capital assets

Cost (in dollars)	Opening Balance	Acquisitions	Disposals, Write- Offs and Transfers	Closing Balance
Informatics hardware	314,282	168,990	(49,979)	433,294
Informatics software	394,981	0	0	394,981
Other equipment	44,448	0	0	44,448
Leasehold improvements	1,053,387	0	0	1,053,387
Assets under construction	0	54,703	0	54,703
	1,807,098	223,693	(49,979)	1,980,813

 

Accumulated amortization (in dollars)	Opening Balance	Amortization	Disposals, Write- Offs and Transfers	Closing Balance
Informatics hardware	234,264	30,131	(49,979)	214,417
Informatics software	137,133	67,366	0	204,500
Other equipment	22,573	3,017	0	25,590
Leasehold improvements	434,522	158,008	0	592,530
	828,492	258,523	(49,979)	1,037,037

 

Net book value (in dollars)	2022	2023
Informatics hardware	80,018	218,877
Informatics software	257,848	190,481
Other equipment	21,875	18,858
Leasehold improvements	618,865	460,857
Assets under construction	0	54,703
	978,606	943,776

The "Acquisition of tangible capital assets" and the "Increase in accounts payables and accrued liabilities" presented in the Statement of Cash Flow exclude an amount of $54,703 in 2022-23, as the amount relates to capital investing activities that remain to be paid as at March 31, 2023. For 2021-22, there were no remaining amounts to be paid in capital investing activities as at March 31, 2022.

8. Contractual obligations

The nature of the Office's activities can result in some large multi-year contracts and obligations whereby the Office will be obligated to make future payments when the services or goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in dollars)	Related Parties	Acquisitions of goods and services	Operating leases	Total
2024	426,314	350,944	2,735	779,993
2025	38,146	10,617	1,187	49,950
2026	30,605	5,656	0	36,261
2027	30,605.00	0	0	30,605
2028	0	0	0	0

9. Related party transactions

a) Services provided without charge by common service organizations

During the year, the Office received services without charge from common service organizations. These services provided without charge have been recorded at the carrying value in the Office’s Statement of Operations and Net Financial Position as follows:

(in dollars)	2023	2022
Accommodation	271,410	258,170
Employer's contribution to the health and dental insurance plans	331,902	344,486
Audit services	165,000	165,000
	768,312	767,656

b) Other transactions with related parties

The Office incurred expenses from transactions in the normal course of business with other government departments, organizations and Crown corporations. A portion of these expenses comes from shared services agreements with other government departments related to the provision of Finance, Human Resources, Administrative and Information Technology services. These expenses exclude services received without charge, which are already disclosed in a). Contractual obligations with related parties, as shown in note 8 above, amount to a total of $1,019,930 over the next five years.

(in dollars)	2023	2022
Expenses for internal services	606,414	539,199
Expenses for other business operations	477,469	619,805
	1,083,883	1,159,004
Accounts payable	32,007	72,496
Accounts receivable	43,013	42,308

10. Segmented information

Presentation by segment is based on the Office's core responsability. 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 for the main core responsibilities, by major object of expense. The segment results for the period are as follows:

(in dollars)	Disclosure and Reprisal Management Program	Internal Services	2022	2023
Transfer payments
Individuals	45,565	0	45,565	29,649
Total transfer payments	45,565	0	45,565	29,649
Operating expenses
Salaries and employee benefits	3,612,213	1,047,123	4,659,336	4,553,227
Professional and special services	76,683	947,082	1,023,765	895,262
Accommodation	210,660	60,751	271,411	258,170
Amortization of tangible capital assets	158,008	100,515	258,523	233,584
Equipment expenses	51,785	26,801	78,586	16,181
Rentals	9,410	57,669	67,079	63,073
Communication	11,854	33,496	45,350	37,973
Information	8,211	34,001	42,212	69,547
Travel and relocation	35,425	5,134	40,559	19,170
Utilities, materials and supplies	10,032	3,381	13,413	4,294
Repair and maintenance	0	1,717	1,717	1,432
Other	0	0	0	1,006
Adjustments to previous year's expenses	(23,102)	(9,084)	(32,186)	(35,795)
Total operating expenses	4,161,179	2,308,586	6,469,765	6,117,124
Net cost of operations	4,206,744	2,308,586	6,515,330	6,146,773