FINANCIAL STATEMENTS 2015-2016

Statement of Management Responsibility (unaudited)

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2016, 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 financial statements of the OCI 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)
2016 2015
     
Liabilities    
Accounts payable and accrued liabilities (note 4) $ 305,996 $ 239,854
Vacation pay and compensatory leave 132,800 123,302
Employee future benefits (note 5) 227,671 214,824
Total liabilities $ 666,467 $ 577,980
Financial assets    
Due from Consolidated Revenue Fund $ 254,046 $ 203,793
Accounts receivable and advances (note 6) 63,220 45,754
Total financial assets $317,266 $249,547
Departmental net debt $349,201 $328,433
Departmental net financial position $(349,201) $(328,433)

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)

2016
Planned
Results

2016

2015

Expenses

 

 

 

Ombudsman for federal offenders $3,966,561 $4,303,739 $4,095,318
Internal services 1,269,107 891,234 1,153,233

Total expenses

$5,235,668 $5,194,973 $5,248,551
Revenues      
Regulatory fees $25 35 30
Revenues earned on behalf of government (25) (35) (30)
Total revenues $0 $0 $0
Net cost of operations before government funding and transfers $5,235,668 $5,194,973 $5,248,551
Government Funding and Transfers      
Net cash provided by Government   $4,516,560 $4,669,908
Change in due from the Consolidated Revenue Fund   50,253 75,797
Services provided without charge by other government departments (note 7)   607,392 580,954
Transfer of the transition payment for implementing salarypayment in arrears (note 8)   0 (123,203)
Net cost of operations after government funding and transfers   $20,768 $45,095
Departmental net financial position - Beginning of Year   $(328,433) $(283,338)
Departmental net financial position - End of Year   $(349,201) $(328,433)

Segmented information (note 9)

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)
2016 2015
Net cost of operations after government funding and transfers $20,768 $45,095

Net increase (decrease) in departmental net debt

20,768 45,095

Departmental net debt - Beginning of Year

328,433 283,338

Departmental net debt - End of Year

$349,201 $328,433

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

 

Statement of Cash Flows (Unaudited)
For the year ended March 31
(in dollars)
2016 2015
Operating activities    
Net cost of operations before government funding and transfers $5,194,973 $5,248,551
     
Non-cash items:    
Services provided without charge by other government departments (note 7) (607,392) (580,954)
     
Transition payments for implementing salary payments in arrears (note 8) 0 123,203
     
Variations in Statement of Financial Position:    
Increase (decrease) in accounts receivable and advances 17,466 (27,263)
Decrease (increase) in accounts payable and accrued liabilities (66,142) (67,811)
Decrease (increase) in vacation pay and compensatory leave (9,498) 17,088
Decrease (increase) in employee future benefits (12,847) (42,906)
Cash used in operating activities $4,516,560 $4,669,908
Net cash provided by Government of Canada $4,516,560 $4,669,908

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

 

1. Authority and objectives

The Office of the Correctional Investigator (OCI) 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 OCI's Ombudsman role for 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 OCI 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 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 “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 2015-16 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 2015-16 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 OCI is deposited to the CRF and all cash disbursements made by the OCI 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 OCI 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 OCI'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, 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 OCI’s contributions to the Plan are charged to expenses in the year incurred and represent the total obligation to the Plan. The OCI’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 labour contracts or 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 OCI 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 OCI 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) 2016 2015
Net cost of operations before government funding and transfers $5,194,973 $5,248,551
Adjustments for items affecting net cost of operations but not affecting authorities:    
   
Services provided without charge by other government departments (607,392) (580,954)
Decrease (increase) in vacation pay and compensatory leave (9,498) 17,088
Decrease (increase) in employee future benefits (12,847) (42,906)
Refund of prior year expenditures 1,615 2,910
Adjustments to previous years' payables at year-end 3,297 108
  (624,825) (603,754)
     
Adjustments for items not affecting net cost of operations but affecting authorities:    
     
Transition payment for implementing salary payments in arrears (note 8) 0 123,203
  0 123,203
Current year authorities used $4,570,148 $4,768,000
(b) Authorities provided and used:
Authorities provided    
Vote 1 / Vote 40 - Program expenditures $4,323,658 $4,459,887
Contributions to employee benefits plan 509,443 526,454
  4,833,101 4,986,341
Less:
Lapsed: Operating and transfer payments
(262,953) (218,341)
Current year authorities used $4,570,148 $4,768,000

 

4. Accounts payable and accrued liabilities

The following table presents details of the OCI’s accounts payable and accrued liabilities:
(in dollars) 2016 2015
Accounts payable to other government departments and agencies $ 4,348 $ 6,150
Accounts payable to external parties 107,899 75,858
Total accounts payable $112,247 $82,008
Accrued liabilities 193,749 157,846
Total accounts payable and accrued liabilities $305,996 $239,854

 

5. Employee future benefits

(a) Pension benefits

The OCI'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 OCI 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 2015-2016 expense amounts to $351,159 ($359,883 in 2014-2015). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-2015) the employee contributions.

The OCI’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 OCI 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) 2016 2015
Accrued benefit obligation - Beginning of year $214,824 $171,918
Expense for the year 12,847 42,906
Benefits paid during the year 0 0
Accrued benefit obligation - End of year $227,671 $214,824

As part of collective agreement negotiations with certain employee groups and 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.

 

6.  Accounts receivable and advances

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

(in dollars) 2016 2015
Receivables - Other government departments and agencies $54,856 $28,350
Receivables - External parties 8,064 17,104
Employee advances 300 300
Net accounts receivable $63,220 $45,754

 

7. Related party transactions

The OCI is related as a result of common ownership to all government departments, agencies, and Crown corporations. The OCI enters into transactions with these entities in the normal course of business and on normal trade terms.  In addition, the OCI has an agreement with Public Safety Canada related to the provision of financial, contracting and procurement, human resource, information management/library, information technology and security services. During the year, the OCI 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 OCI 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 Statement of Operations and Departmental Net Financial Position as follows:

(in dollars) 2016 2015
Accommodation $312,955 $309,413
Employer's contribution to the health and dental insurance plans 294,437 271,541
Total $607,392 $580,954

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 Services and Procurement Canada and audit services provided by the Office of the Auditor General are not included in the OCI’s Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

(in dollars) 2016 2015
Accounts receivable – Other government departments and agencies $54,856 $28,350
Accounts payable – Other government departments and agencies $4,348 $6,150
Expenses – Other government departments and agencies $152,269 $170,098

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

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

The Government of Canada implemented salary payments in arrears in 2014-2015. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments 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 OCI. However, it did result in the use of additional spending authorities by the OCI. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Services and Procurement Canada, who is responsible for the administration of the Government pay system.

9. Segmented information

Presentation by segment is based on the OCI'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:

  2016 2015
(in dollars) Ombudsman for
federal offenders
Internal services Total Total
Expenses        
Operating Expenses        
Salaries and employee benefits $3,623,319 587,242 4,210,561 4,095,288
Professional and special services 128,058 157,342 285,400 495,415
Accommodation 265,596 57,204 322,800 321,810
Travel and relocation 250,280 1,316 251,596 208,911
Communication 8,169 34,907 43,076 42,646
Equipment 0 12,145 12,145 9,615
Utilities, material and supplies 2,577 22,354 24,931 15,872
Information 25,740 8,021 33,761 34,944
Repairs 0 2,523 2,523 4,419
Equipment rentals 0 7,907 7,907 19,631
Other 0 273 273 0
Total expenses 4,303,739 891,234 5,194,973 5,248,551
Revenues        
Regulatory fees 0 35 35 30
Revenue earned on behalf of government 0 (35) (35) (30)
Total revenues 0 0 0 0
Net cost of operations before government funding and transfers $4,303,739 $891,234 $5,194,973 $5,248,551