FINANCIAL STATEMENTS 2011-2012

Statement of Management Responsibility (unaudited)

Responsibility for the integrity and objectivity of the accompanying financial statements for the period ended March 31, 2012, and all information contained in these statements rests with the management of the Office of the Correctional Investigator (OCI). These financial statements have been prepared by management using the Government'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 organization's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the Office's Departmental Performance Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting 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 the Office and through conducting a periodic risk-based assessment of the effectiveness of the system of Internal Control over Financial Reporting (ICRF).

The system of ICRF 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.

The Office is subject to periodic Core Control Audits performed by the Office of the Comptroller General (OCG) and uses the results of such audits to comply with the Treasury Board Policy on Internal Control.

A Core Control Audit was performed in 2011-12 by the OCG. The Audit Report and related Management Action Plan are posted on the Office’s web site at: http://www.oci-bec.gc.ca/cnt/rpt/oth-aut/oth-aut201102-eng.aspx

Original signed by:
Howard Sapers
Correctional Investigator
Ottawa, Canada

Manuel Marques
Chief Financial Officer
Ottawa, Canada

Statement of Financial Position (unaudited)
As at March 31
(in dollars)
2012 2011
    Restated
Note 9
Liabilities    
Accounts payable and accrued liabilities (Note 4) $112,146 $ 83,341
Vacation pay and compensatory leave 122,475 142,886
Employee future benefits (Note 5) 418,390 549,482
Total Net Liabilities $653,011 $775,709
Financial Assets    

Due from Consolidated Revenue Fund

$111,496 $83,341

Accounts receivable and advances (Note 6)

24,834 17,469
Total Net financial assets $136,330 $100,810
Departmental net debt $516,681 $674,899
Departmental net financial position $(516,681) $(674,899)

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

 

Statements of Operations and Departmental Net Financial Position (unaudited)

For the Year Ended March 31
(in dollars)

2012
Planned
Results

2012

2011
Restated
(Note 9)

Expenses

 

 

 

Ombudsman to federal offenders

 

$4,010,929

$3,736,703

Internal Services   1,260,871 917,249

Total expenses

$4,573,000

5,271,800

4,653,952

Revenues

 

 

 

Miscellaneous revenues

 

223

323

Revenues earned on behalf of government

 

(223)

(323)

Total Revenues

 

-

-

Net Cost of operations before government funding and transfers

$4,573,000

5,271,800

4,653,952

Government Funding and Transfers

 

 

 

Net cash provided by Government

 

4,912,170

4,092,090

Change in due from the Consolidated Revenue Fund

 

28,155

(15,999)

Services provided without charge by other government departments (Note 7)

 

489,693

450,902

Net Cost of Operations after government funding and transfers

 

(158,218)

126,959

Net financial position at Beginning of Year

 

(674,899)

(547,940)

Net financial position at End of Year

 

$(516,681)

$(674,899)


Segmented information (Note 8)
The accompanying notes form an integral part of these financial statements.

 

Statement of Change in Departmental Net Debt (unaudited)
For the year ended March 31
(in dollars)
2012 2011
Net Cost of Operations after government funding and transfers $(158,218) $126,959

Net Increase (decrease) in Departmental Net Debt due to operations

(158,218) 126,959

Departmental Net Debt Beginning of Year

674,899 547,940

Departmental Net Debt End of Year

$516,681 $674,899

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

 

Statement of Cash Flows (unaudited)
For the year ended March 31
(in dollars)
2012 2011
Restated
Note 9
Operating activities    
Net Cost of Operations before government funding and transfers $5,271,800 $4,653,952
Non-cash items:    
Services provided without charge by other government departments (Note 7) (489,693) (450,902)
Variations in Statement of Financial Position:    
Decrease (increase) in accounts receivable and advances 7,365 12,877
Decrease (increase) in accounts payable and accrued liabilities (28,805) 15,999
Decrease (increase) in vacation pay and compensatory leave 20,411 (40,200)
Decrease (increase) in employee future benefits (Note 5) 131,092 (99,636)
Cash used by operating activities $4,912,170 $4,092,090
Financing activities
Net cash provided by Government of Canada $4,912,170 $4,092,090

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

 

1. Authority and objectives

The Office of the Correctional Investigator was established in 1973 pursuant to Part II of the Inquiries Act. With the proclamation in November 1992 of Part III of the Corrections and Conditional Release Act, this is now the enabling legislation. The mandate of the Correctional Investigator, as defined by this legislation, is to function as an Ombudsman to federal offenders. The Correctional Investigator is independent of the Correctional Service of Canada and may initiate an investigation on receipt of a complaint by or on behalf of an offender, at the request of the Minister or on his own initiative. The Correctional Investigator is required by legislation to report annually through the Minister of Public Safety to both Houses of Parliament.

In addition, Section 19 of the Corrections and Conditional Release Act requires that the Correctional Service of Canada “where an inmate dies or suffers serious bodily injury” conduct an investigation and provide a copy of the report to the Correctional Investigator.

Internal Services supports the delivery of the Office's Ombudsman role to offenders as well as its corporate obligations to the Central Agencies of Government.

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:

(a) Parliamentary appropriations
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 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 Statement of Operations and Departmental Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2011-12 Report on Plans and Priorities.

 

(b) Net Cash Provided by Government
The Office operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General of 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 federal government.

 

(c) 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 authorities to discharge its liabilities.

 

(d) Revenues

Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the Office's liabilities. While the Correctional Investigator is expected to maintain accounting 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.

 

(e) Expenses

Expenses are recorded on the accrual basis:

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 accommodation and employer contributions to the health and dental insurance plans, are recorded as operating expenses at their estimated cost.

 

(f) Employee future benefits

Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Office’s contributions to the Plan are charged to expenses in the year incurred and represent the total 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: Employees entitled to severance benefits under conditions of employment, earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

 

(g) Account Receivables and Advances

Accounts receivables and advances are stated at the lower of cost and recoverable value. A provision is made for receivables where recovery is considered uncertain.

 

(h) 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. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant item where estimate is used is 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.

 

3. Parliamentary Authorities

The Office 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, 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 appropriations used:
(in dollars) 2012 2011
Restated
Note 9
Net cost of operations before government funding and transfers $5,271,800 $4,653,952
Adjustments for items affecting net cost of operations but not affecting authorities:    
Add (Less):    
Services provided without charge by other government departments (Note 7) (489,693) (450,902)
Decrease (increase) in vacation pay and compensatory leave 20,411 (40,200)
Decrease (increase) in employee future benefits (Note 5) 131,092 (99,636)
Bad debt expenses (2,459) -
Refund of prior year expenditures 3,161 5,126
Adjustments to previous years' payables at year-end 2,355 10,239
  (335,133) (575,372)
Current year authorities used $4,936,667 $4,078,579
(b) Authorities provided and used:
Program expenditures - Vote 40 $4,474,298 $3,696,426
Contributions to employee benefits plan 537,427 465,710
Less:
Lapsed: Operating
(75,058) (83,557)
Current year authorities used $4,936,667 $4,078,579

 

4. Accounts payable and accrued liabilities

The following table presents details of the Office's accounts payable and accrued liabilities:
(in dollars) 2012 2011
Accounts payable to other government departments and agencies $ 2,347 $10,893
Accounts payable to external parties 88,944 62,157
Total accounts payable $86,597 $73,050
Accrued liabilities 20,855 10,291
Total accounts payable and accrued liabilities $112,146 $83,341

 

5. Employee Future Benefits

(a) Pension benefits

The Office's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. 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 Office contribute to the cost of the Plan. The 2011-12 expense amounts to $372,967 ($326,927 in 2010-11), which represents approximately 1.8 times (1.9 times in 2010-2011) the contributions by 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.

(b) Severance benefits

The Office provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is outlined below.

As part of changes to conditions of employment for executives and other employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees on October 1, 2011. 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.

(in dollars) 2012 2011
Accrued benefit obligation, beginning of year $549,482 $449,846
Expense for the year 341,685 99,636
Benefits paid during the year (472,777) (0)
Accrued benefit obligation, end of year $418,390 $549,482

6. Accounts receivable and advances

The following table presents details of accounts receivable and advances balances:

(in dollars) 2012 2011
Receivables - Other government departments and agencies $23,684 $17,169
Receivables - External parties 2,459 -
Employee advances 1,150 300
Subtotal $27,293 $17,469
Allowance for doubtful accounts on receivables from external parties (2,459) -
Net account receivable $24,834 $17,469

7. Related party transactions

The Office is related as a result of common ownership to all government 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 an agreement with the Department of Public Safety and Emergency Preparedness Canada related to the provision of corporate services. During the year, the Office received common services which were obtained without charge from other government departments as disclosed below.

(a) Common services provided without charge by other government departments:

During the year the Office received common services without charge from certain service organizations, related to accommodation and the employer's contribution to the health and dental insurance plans. These services provided without charge have been recorded in the Office's Statement of Operations and Departmental Net Financial Position as follows:

(in dollars) 2012 2011
Accommodation $276,932 $254,576
Employer's contribution to the health and dental insurance plans 212,761 196,326
Total $489,693 $450,902

The Government has centralized some of its administrative activities for efficiency and 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 and audit services provided by the Office of the Auditor General are not included in the Office's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

(in dollars) 2012 2011
Expenses - Other Government departments and agencies $307,414 $245,849

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

8. Segmented Information

Presentation by segment is based on the organization'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 2. The following table presents the expenses incurred and revenue generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

  2012 2011
Restated Note 9
  Ombudsman to federal offenders Internal Services Total Total
Expenses        
Operating Expenses        
Salaries and employee benefits $3,364,537 $668,626 4,033,163 3,548,421
Professional and special services 139,975 337,430 477,405 356,134
Accommodation 229,743 76,833 306,576 280,837
Repairs 652 13,130 13,782 32,441
Travel and relocation 248,858 12,139 260,997 288,179
Equipment - 75,986 75,986 28,898
Communication - 37,670 37,670 40,851
Utilities, material and supplies 1,473 20,795 22,268 23,005
Equipment rentals - 4,175 4,175 3,473
Information 23,232 13,995 37,227 61,327
Bad debt 2,459 - 2,459 -
Other - 92 92 (9,615)
Total Expenses 4,010,929 1,260,871 5,271,800 4,653,952
Revenues        
Regulatory fees 10 213 223 323
Revenue earned on behalf of Government (10) (213) (223) (323)
Total Revenues 0 0 0 0
Net Cost of Operations $4,010,929 $1,260,871 $5,271,800 $4,653,952

9. Accounting changes

During 2011, amendments were made to Treasury Board Accounting Standard 1.2--Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendmentsare effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to theOffice’s financial statements are described below. These changes have been applied retroactively, andcomparative information for 2010-11 has been restated.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, the Office now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Revenues are now presented net of non-respendable amounts in the Statement of Operations and Departmental Net Financial Position and Statement of Financial Position. The effect of this change was to increase the net cost of operations after government funding and transfers by $223 for 2012 ($323 for 2011).

Government funding and transfers, as well as the credit related to services provided without charge by other government departments, are now recognized in the Statement of Operations and Departmental Net Financial Position below “Net cost of operations before government funding and transfers.” In previous years, the Office recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the net cost of operations after government funding and transfers by $5,430,018 for 2012 ($4,526,670 for 2011).

Accounting Changes

(in dollars)

2011
As previously stated

Effect of change

2011
Restated

Statement of Operations and Departmental Net Financial Position

 

 

 

Revenues

323

(323)

0

Government funding and transfers      

Net Cost of Operations before government funding and transfers

4,653,629

323

4,653,952

Net cash provided by Government 0 4,092,090 4,092,090
Change in due from Consolidated Revenue Fund 0 (15,999) (15,999)
Services provided without charge by other government departments 0 450,902 450,902