FINANCIAL STATEMENTS 2014-2015

Statement of Management Responsibility (unaudited)

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2015, 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 OCI'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 (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 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 OCI and through conducting a periodic 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.

The OCI is subject to periodic Core Control Audits performed by the Office of the Comptroller General 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 Office of the Comptroller General. The Audit Report and related Management Action Plan are posted on the OCI’s web site at:  www.oci-bec.gc.ca/cnt/rpt/oth-aut/oth-aut201102-eng.aspx

The OCI’s financial statements have not been audited.

Howard Sapers
Correctional Investigator
Ottawa, Canada

Manuel Marques
Chief Financial Officer
Ottawa, Canada

 

Statement of Financial Position (Unaudited)
As at March 31
(in dollars)
2015 2014
     
Liabilities    
Accounts payable and accrued liabilities (note 4) $ 239,854 $ 172,043
Vacation pay and compensatory leave 123,302 140,390
Employee future benefits (note 5) 214,824 171,918
Total liabilities $ 577,980 $ 484,351
Financial assets    
Due from Consolidated Revenue Fund $ 203,793 $ 127,996
Accounts receivable and advances (note 6) 45,754 73,017
Total financial assets $249,547 $201,013
Departmental net debt $328,433 $283,338
Departmental net financial position $(328,433) $(283,338)

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)

2015
Planned
Results

2015

2014

Expenses

 

 

 

Ombudsman for federal offenders $4,484,146 $4,095,318 $3,790,191
Internal services 789,473 1,153,233 1,165,614

Total expenses

$5,273,619 $5,248,551 $4,955,805
Revenues      
Regulatory fees $190 30 35
Revenues earned on behalf of government (190) (30) (35)
Total revenues $0 $0 $0
Net cost of operations before government funding and transfers $5,273,619 $5,248,551 $4,955,805
Government Funding and Transfers      
Net cash provided by Government   $4,669,908 $4,659,598
Change in amount due from the Consolidated Revenue Fund   75,797 68,367
Services provided without charge by other government departments (note 7)   580,954 574,260
Transfer of the transition payment for implementing salary Payment in Arrears (note 8)   (123,203) 0
Net cost of operations after government funding and transfers   $45,095 $(346,420)
Departmental net financial position - Beginning of Year   $(283,338) $(629,758)
Departmental net financial position - End of Year   $(328,433) $(283,338)

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)
2015 2014
Net cost of operations after government funding and transfers $45,095 $(346,420)

Net increase (decrease) in departmental net debt

45,095 (346,420)

Departmental net debt - Beginning of Year

283,338 629,758

Departmental net debt - End of Year

$328,433 $283,338

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

 

Statement of Cash Flows (Unaudited)
For the year ended March 31
(in dollars)
2015 2014
Operating activities    
Net cost of operations before government funding and transfers $5,248,551 $4,955,805
Non-cash items:    
Services provided without charge by other government departments (note 7) (580,954) (574,260)
Transition payment for implementing salary Payments in Arrears (note 8) 123,203 0
Variations in Statement of Financial Position:    
Increase (decrease) in accounts receivable and advances (27,263) (11,227)
Decrease (increase) in accounts payable and accrued liabilities (67,811) (45,558)
Decrease (increase) in vacation pay and compensatory leave 17,088 (24,942)
Decrease (increase) in employee future benefits (42,906) 359,780
Cash used by operating activities $4,669,908 $4,659,598
Net cash provided by Government of Canada $4,669,908 $4,659,598

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 for 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 and Emergency Preparedness 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 OCI's Ombudsman role for federal offenders as well as its corporate obligations to the Central Agencies of Government.

2. 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 authorities

The Office is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the OCI 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, 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 reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2014-15 Report on Plans and Priorities. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2014-15 Report on Plans and Priorities.

(b) Net cash provided by Government

The OCI 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.

(c) Amounts due from/to the CRF

Amounts due from or 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 from regulatory fees are recognized in the accounts based on the services provided in the year.

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 and conditions of employment.
  • Services provided without charge by other government departments for accommodation, 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 of Canada. 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 terms and 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) Accounts receivable and advances

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.

(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 in the financial statements. 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 authorities used:
(in dollars) 2015 2014
Net cost of operations before government funding and transfers $5,248,551 $4,955,805
Adjustments for items affecting net cost of operations but not affecting authorities:    
   
Services provided without charge by other government departments (580,954) (574,260)
Decrease (increase) in vacation pay and compensatory leave 17,088 (24,942)
Decrease (increase) in employee future benefits (42,906) 359,780
Refund of prior year expenditures 2,910 1,501
Adjustments to previous years' payables at year-end 108 8,297
  (603,754) (229,624)
     
Adjustments for items not affecting net cost of operations but affecting authorities:    
     
Transition payment for implementing salary Payments in Arrears 123,203 0
  123,203 0
Current year authorities used $4,768,000 $4,726,181
(b) Authorities provided and used:
Vote 1 - Program expenditures $4,459,887 $4,379,091
Contributions to employee benefits plan 526,454 533,970
  4,986,341 4,913,061
Less:
Lapsed: Operating
(218,341) (186,880)
Current year authorities used $4,768,000 $4,726,181

 

4. Accounts payable and accrued liabilities

The following table presents details of the Office’s accounts payable and accrued liabilities:
(in dollars) 2015 2014
Accounts payable to other government departments and agencies $ 6,150 $ 50,949
Accounts payable to external parties 75,858 88,437
Total accounts payable $82,008 $139,386
Accrued liabilities 157,846 32,657
Total accounts payable and accrued liabilities $239,854 $172,043

 

5. Employee future benefits

(a) Pension benefits

The Office's employees participate in the public service pension plan (the “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 Plan 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 2014-2015 expense amounts to $359,883 ($375,420 in 2013-2014). For Group 1 members, the expense represents approximately 1.41 times (1.6 times in 2013-2014) the employee contributions and, for Group 2 members, approximately 1.39 times (1.5 times in 2013-2014) 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 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 as follows:

(in dollars) 2015 2014
Accrued benefit obligation - Beginning of year $171,918 $531,698
Expense for the year 42,906 (359,780)
Benefits paid during the year 0 0
Accrued benefit obligation - End of year $214,824 $171,918

As part of the terms and conditions of employment for executives and other 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.

 

6.  Accounts receivable and advances

The following table presents details of the Office’s accounts receivable and advances:

(in dollars) 2015 2014
Receivables - Other government departments and agencies $28,350 $63,197
Receivables - External parties 17,104 9,520
Employee advances 300 300
Net accounts receivable $45,754 $73,017

 

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 related to the provision of certain internal services. During the year, the Office also 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) 2015 2014
Accommodation $309,413 $308,133
Employer's contribution to the health and dental insurance plans 271,541 266,127
Total $580,954 $574,260

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) 2015 2014
Accounts receivable – Other government departments and agencies $28,350 $63,197
Accounts payable – Other government departments and agencies $6,150 $50,949
Expenses – Other government departments and agencies $170,098 $321,223

Expenses and revenues disclosed in (b) exclude common services provided without charge that is already disclosed in (a).

8. Transfer of the transition payment for implementing salary Payment in Arrears

The Government of Canada implemented salary Payment in Arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payment in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Office. However, it did result in the use of additional spending authorities by the Office. Prior to year end, the transition payment for implementing salary Payment in Arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

9. 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 2. The following table presents the expenses incurred and revenue generated for the two programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

  2015 2014
(in dollars) Ombudsman for
federal offenders
Internal services Total Total
Expenses        
Operating Expenses        
Salaries and employee benefits $3,471,403 $623,885 4,095,288 3,675,124
Professional and special services 118,894 376,521 495,415 442,331
Accommodations 261,948 59,862 321,810 320,254
Travel and relocation 205,073 3,838 208,911 263,497
Repairs 0 4,419 4,419 65,008
Information 28,278 6,666 34,944 63,365
Equipment 0 9,615 9,615 37,850
Communication 6,877 35,769 42,646 35,321
Utilities, material and supplies 2,845 13,027 15,872 22,005
Equipment rentals 0 19,631 19,631 30,873
Other 0 0 0 177
Total Expenses 4,095,318 1,153,233 5,248,551 4,955,805
Revenues        
Regulatory fees 20 10 30 35
Revenue earned on behalf of government (20) (10) (30) (35)
Total Revenues 0 0 0 0
Net cost of operations before government funding and transfers $4,095,318 $1,153,233 $5,248,551 $4,955,805