2013–14 Report on Plans and Priorities - Future-Oriented Financial Statements

Office of the Public Sector Integrity Commissioner of Canada

Statement of Management Responsibility

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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 January 8, 2013 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
January 15, 2013

 

 

Future-Oriented Statement of Operations and Net Financial Position (Unaudited)

For the year ending March 31 (in dollars)	Estimated Results 2013	Planned Results 2014
Operating Expenses
Disclosure and Reprisal Management	3,991,245	4,465,175
Internal Services	2,373,510	2,178,430
Net cost of operations before government funding and transfers	6,364,755	6,643,605
Government funding and transfers
Net cash provided by Government	5,849,909	5,877,963
Change in due from Consolidated Revenue Fund	(185,375)	52,836
Services provided without charge by other government departments (note 10)	637,737	646,165
Net cost of operations after government funding and transfers	62,484	66,641
Net financial position - Beginning of year	(201,350)	(263,834)
Net financial position - End of year	(263,834)	(330,475)

 

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.

Segmented information (Note 11)

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

 

Future-Oriented Statement of Net Financial Position (Unaudited)

As at March 31 (in dollars)	Estimated Results 2013	Planned Results 2014
Liabilities
Accounts Payable and Accrued Liabilities (Note 8)	423,761	470,299
Vacation Pay and Compensatory Leave	155,820	150,792
Employee Future Benefits (Note 9)	358,000	363,370
Total Liabilities	937,581	984,461
FINANCIAL ASSETS
Due from Consolidated Revenue Fund	310,443	363,279
Accounts Receivable (Note 6)	114,318	108,020
Total Financial Assets	424,761	471,299
Net Debt	512,820	513,162
Non-Financial Assets
Tangible Capital Assets (Note 7)	248,986	182,687
Total Non-Financial Assets	248,986	182,687
Net Financial Position	(263,834)	(330,475)

 

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 2012.

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

 

Future-Oriented Statement of Change in Net Debt (Unaudited)

For the year ending March 31 (in dollars)	Estimated Results 2013	Planned Results 2014
Net cost of operations after government funding and transfers	62,484	66,641
Change due to tangible capital assets
Acquisition of tangible capital assets	10,000	10,000
Amortization of tangible capital assets	(66,299)	(76,299)
Total change due to tangible capital assets	(56,299)	(66,299)
Change due to prepaid expenses	(284)
Net increase in net debt	5,901	342
Net debt - Beginning of year	506,919	512,820
Net debt - End of year	512,820	513,162

 

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 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 2013	Planned Results 2014
OPERATING ACTIVITIES
Net cost of operations before government funding and transfers	6,364,755	6,643,605
Non-Cash Items:
Amortization of Tangible Capital Assets (Note 7)	(66,299)	(76,299)
Services provided without charge from other government departments (Note 10)	(637,737)	(646,165)
Variations in Future-Oriented Statement of Financial Position:
Increase (decrease) in Accounts Receivable and Advances	9,997	(6,298)
Increase (decrease) in Prepaid Expenses	(284)	-
Decrease (increase) in Liabilities	169,477	(46,880)
Cash used in Operating Activities	5,839,909	5,867,963
CAPITAL ACTIVITIES
Acquisitions of Tangible Capital Assets (Note 7)	10,000	10,000
Cash used in Capital Activities	10,000	10,000
Net Cash Provided by Government of Canada	5,849,909	5,877,963

 

Information for the year ending March 31, 2013 includes actual amounts from April 1, 2012 to December 31, 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 information in the estimated results for fiscal year 2012-13 is based on acutal results as at December 31, 2012 and forecasts for the remainder of the year. Estimated year end information for 2012-13 is used as the opening position for the 2013-14 planned results, and forecasts have been made for the planned results for the 2013-14 year.

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.

These assumptions are adopted as at January 8, 2013.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2012-13 and for 2013-14, 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 assumptions 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 Net Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 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 Receivable
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. Parliamentary Authorities

The Office receives its funding through annual Paliamentary authorities. Items recognized in the Future-oriented Statement of Operations and Net 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 2013	Planned Results 2014
Authorities requested
Vote 50	5,568,580	5,410,000
Statutory	523,072	520,799
Authorities Available	6,091,652	5,930,799
Lapse	423,153	-
Forecast authorities to be used	5,668,499	5,930,799

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 before government funding and transfers to forecast authorities to be used (in dollars)	Estimated Results 2013	Planned Results 2014
Net cost of operations before government funding and transfers	6,364,755	6,643,605
Adjustments for items affecting net cost of operations before government funding and transfers but not affecting authorities:
Add (Less):
Amortization of Tangible Capital Assets (Note 7)	(66,299)	(76,299)
Decrease (increase) in Employee Future Benefits	10,600	(5,370)
Decrease (increase) in Vacation Pay and Compensatory Leave	(12,820)	5,028
Services provided without Charge by other Government Departments (Note 10)	(637,737)	(646,165)
	(706,256)	(722,806)
Adjustments for items not affecting net cost of operations before government funding and transfers but affecting authorities:
Add (Less):
Acquisitions of Tangible Capital Assets (Note 7)	10,000	10,000
	10,000	10,000
Forecast authorities to be used	5,668,499	5,930,799

6. Accounts Receivable

 

(in dollars)	Estimated Results 2013	Planned Results 2014
Accounts Receivable
Other Government Departments	114,318	108,020
Total	114,318	108,020

 

 7. Tangible Capital Assets

(in dollars)	Estimated Results 2013	Planned Results 2014
Opening balance	305,285	248,986
Acquisition of Tangible Capital Assets	10,000	10,000
Less: Current year amortization	(66,299)	(76,299)
Net Book Value	248,986	182,687

 

8. Accounts Payable and Accrued Liabilities

(in dollars)	Estimated Results 2013	Planned Results 2014
External Parties
Accounts Payable and Accrued Liabilities	209,037	254,782
Accrued Salaries	38,913	49,985
Other Government Departments
Accounts Payable	175,812	165,533
Total	423,762	470,300

 

9. 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 $420,186 in 2012-13 and $422,370 in 2013-14 representing approximately 1.9 times the contributions of employees.
   
   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 2013	Planned Results 2014
Accrued benefit obligation, beginning of year	368,600	358,000
Expense for the year	83,130	5,370
Expected benefits payments during the year	(93,730)	-
Accrued benefit obligation, end of year	358,000	363,370

 

10. 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 $488,000 in 2012-13 and $500,000 in 2013-14. 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 2013	Planned Results 2014
Accommodation	270,000	275,000
Employer's contributions to the health and dental insurance plans	274,737	276,165
Audit services	93,000	95,000
Total	637,737	646,165

 

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 and Net Financial Position.

11. Segmented information

Presentation by segment is based on the Office's program alignment 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:

		2014
(in dollars)	Estimated Results 2013	Disclosure and Reprisal Management	Internal Services	Planned Results 2014
Operating Expenses
Salaries and Employee Benefits	4,172,456	3,148,331	897,974	4,046,305
Professional and Special Services	1,363,000	763,000	933,000	1,696,000
Accommodation	398,148	337,836	65,313	403,149
Information	87,000	23,000	82,000	105,000
Rentals	74,852	14,352	68,000	82,352
Amortization of tangible capital assets	66,299	36,156	40,143	76,299
Travel & Relocation	41,000	62,000	2,000	64,000
Communication	52,000	28,000	31,000	59,000
Utilities, Materials and Supplies	26,000	12,500	21,000	33,500
Repairs and Maintenance	16,000	-	25,000	25,000
Equipment expenses	28,000	-	13,000	13,000
Other	40,000	40,000	-	40,000
Net cost of operations before government funding and transfers	6,364,755	4,465,175	2,178,430	6,643,605