2012-13 Future-oriented Financial Statement

Statement of Management Responsibility (unaudited)

Senior Management of the Office of the Correctional Investigator is responsible for this future-oriented financial statement, 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 31, 2012 and reflect the plans described in the Report on Plans and Priorities.

This future-oriented financial statement has been prepared in accordance with the Treasury Board’s accounting policies and its Guide on the preparation of general purpose future-oriented financial statements.

This future-oriented financial statement has not been audited.

Howard Sapers
Correctional Investigator
Ottawa, Canada

Manuel Marques
Chief Financial Officer
Ottawa, Canada

Future-oriented Statement of Financial Position (unaudited)
As at March 31, 2013
(in dollars)
2012 2013
Assets
Financial Assets
Due from Consolidated Revenue Fund $109,000 $90,250
Accounts receivable and advances (Note 4) 15,300 13,300
Total financial assets 124,300 103,550
Non-financial assets
Tangible capital assets 0 0
Total Assets 124,300 103,550
 
Liabilities and Equity of Canada
Liabilities
Accounts payable and accrued liabilities (Note 5) $109,000 $90,250
Vacation pay and compensatory leave 141,705 139,116
Employee future benefits (Note 6) 579,482 619,482
Total Liabilities $830,187 $848,848
Equity of Canada (705,887) (745,299)
Total Liabilities and Equity of Canada $124,300 $103,550

Future-oriented Statement of Operations (unaudited)
For the Year Ended March 31, 2013
(in dollars)
2012 2013
Expenses
Ombudsman to federal offenders $4,294,966 $4,585,306
Internal services 738,114 791,267
Total Expenses 5,033,080 5,376,574
Revenues
Ombudsman to federal offenders 50 100
Internal services 0 0
Total revenues 50 100
 
Net Cost of Operations $5,033,030 $5,376,474

Future-oriented Statement of Equity (unaudited)
For the Year Ended March 31, 2013
(in dollars)
2012 2013
Equity of Canada, beginning of year $(647,899) $(705,887)
Net cost of operations (5,033,030) (5,376,474)
Net cash provided by Government 4,523,383 4,879,505
Change in due from the Consolidated Revenue Fund 25,659 (18,750)
Services provided without charge by other government departments (Note 7) 453,000 476,308
Equity of Canada, end of year (705,887) (745,299)

Future-oriented Statement of Cash Flow (unaudited)
For the Year Ended March 31, 2013
(in dollars)
2012 2013
Operating activities
Net Cost of Operations $5,033,030 $5,376,474
 
Non-cash items:
Services provided without charge by other government departments (Note 7) (453,000) (476,308)
Amortization of tangible capital assets 0 0
 
Variations in Statement of Financial Position:
(Decrease) increase in accounts receivable and advances (2,169) (2,000)
(Increase) decrease in accounts payables and accrued liabilities (25,659) 18,750
Decrease (increase) in vacation leave and compensatory leave 1,181 2,589
(Increase) decrease in employee future benefits (Note 6) (30,000) (40,000)
Cash used by operating activities 4,523,383 4,879,505
 
Net cash provided by Government of Canada 4,523,383 4,879,505

Segmented information (note 8)
The accompaning notes form an intergral part of this financial statement.

 

1. Authority and purpose

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. Significant assumptions

The Future-oriented Financial Statement has been prepared on the basis of the government priorities and the plans of the organization as described in the Report on Plans and Priorities. The Future-oriented Statement of Operations is prepared based on the Program Alignment Architecture Structure approved by TBS.

The main assumptions are as follows:

  1. The organization’s activities will remain substantially the same as in the previous year.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
  3. Allowances for uncollectibility are based on the likely outcome of actual situations.
  4. Estimated year end information for 2011-12 is used as the opening position for the 2012-13 forecasts.

These assumptions are adopted as at January 31, 2012.

3. Variations and changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2011-12 and for 2012-13, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this Future-oriented Financial Statement, the Office has made estimates and assumptions concerning the future. These estimates and jugements may differ from the subsequent actual results. Estimates and judgement 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 Statement and historical Financial Statement include:

  1. The timing and amounts of acquisition and disposals of 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 accounting policies

The Future-oriented Financial Statement has been prepared in accordance with the Treasury Board accounting policies stated below and its Guide on the preparation of general purpose Future-oriented Financial Statements, 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:

(a) Parliamentary appropriations: The Office is financed by the Government of Canada through Parliamentary appropriations. The cash accounting basis is used to recognize transactions affecting parliamentary appropriations. The Future-oriented Financial Statement is based on accrual accounting. Consequently, items presented in the Future-oriented Financial Statement is not necessarily the same as the one provided through appropriations from Parliament. Note 5 provides a reconciliation between the bases of reporting.

(b) Net Cash provided by Government: The Office operates within the Consolidated Revenue Fund (CRF), which is administred 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 organizations of the Government.

(c) Amount due from/to 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.

(d) Revenues
Revenues from regulatory fees are recognized in the acocunts based on the services provided in the year.
Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

Funds that have been received are recorded as deferred reveunue, provided the organization has an obligation to other parties for the provision of goods, services or the use of assets in the future. Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

(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 the 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 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 obligation to the Plan. Current legislation does not require the Office to make contributions for any actuarial deficiencies of the Plan.
  • Severance benefits: Employees are entitled to severance benefits under 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 derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

5. Parliamentary appropriations

The Office receives most of its funding through annual Parliamentary authorities. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through Parliamentary appropriations 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 requested authorities:
(in dollars) 2012 2013
Net cost of operations $5,033,030 $5,376,474
Adjustments for items affecting net cost of operations but not affecting authorities:
Add (Less)
   
Services provided without charge by other government departments (Note 7) (453,000) (476,308)
Refund of prior year expenditures 2,130 2,130
Adjustments of accounts payable at year end 13,500 13,600
Increase (Decrease) in Employee severance benefits (30,000) 40,000
Increase (Decrease) in vacation pay and compensatory leave 1,181 (2,588)
Revenue not available for spending 50 100
Amortization of tangible capital assets 0 (5,000)
  (466,138) (428,066)
Forecast authorities used $4,566,892 $4,948,408
(b) Authorities requested
(in dollars) 2012 2013
Program expenditures - Vote 40 $4,014,465 $4,307,353
Contributions to employee benefits plan 577,427 641,055
Forecast of authorities available $4,591,892 $4,948,408

Forecast authorities requested for the year ending March 31, 2013 are the planned spending amounts presented in the 2012-13 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2012 include amounts presented in the 2011-12 Main Estimates and supplementary Estimates (A) and (B), planned for presentation in Supplementary Estimates (C) and estimates of amounts to be allocated at year-end from Treasury Board central votes.

6. Employee benefits

(a) 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 Office contribute to the cost of the Plan. The expense amounts for both 2011-12 and 2012-13 is estimated at $300,000 each year, represents approximately 1.9 times 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 final salary. 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) 2012 2013
Accrued benefit obligation, beginning of year $549,482 $579,482
Expense or adjustment for the year 100,000 75,000
Benefits paid during the year (70,000) (35,000)
Accrued benefit obligation, end of year $579,482 619,482

 

7. 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. Also, during the year, the Office receives common services which are obtained without charge from Government departments as disclosed below:

(a) Common services provided without charge by government departments
During the year, the Office is forecasted to receive services without charge from departments for accommodation, the employer’s contribution to the health and dental insurance plans and workers’ compensation coverage. These services provided without charge have been recorded in the Office’s future-oriented statement of operations as follows:

(in dollars) 2012 2013
Accommodation $256,000 $260,000
Employer contributions to the health and dental insurance plans 197,000 216,308
  $453,000 $476,308

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 services organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as 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 future-oriented statement of operations.

b) Other transactions with related parties
(in dollars) 2012 2013
Expenses - Other Government departments and agencies $388,071 $476,308

8. Segmented Information

Presentation by segment is based on the organization’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 main program activities, by major object of expenses and by major type of revenues. The anticipated segment results for the period are as follows:

(in dollars) 2012 2013
Expenses Total Ombudsman for
federal
offenders
Internal Services Total
Salaries and employee benefits 3,973,320 3,711,224 632,190 4,343,414
Professional and special services 386,656 316,022 53,508 369,530
Accommodation 281,817 238,253 46,421 284,673
Travel and relocation 234,951 192,030 32,514 224,544
Equipment 39,930 32,635 5,526 38,161
Utilities, material and supplies 24,932 20,378 3,450 23,828
Communication 38,110 31,148 5,274 36,422
Equipment rentals 3,242 2,650 449 3,098
Information 33,837 27,655 4,683 32,338
Amortization 0 0 5,000 5,000
Repairs 16,286 13,311 2,254 15,565
Total Expenses 5,033,080 4,585,306 791,267 5,376,574
Revenues
Other revenues 50 100 0 100
Net Cost of Operations
Net Cost of Operations $5,033,030 $4,585,206 $791,267 $5,376,474