Financial Statements for the year ended March 31, 2011 (Unaudited) - Privy Council Office
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[ PDF version of PCO Financial Statements 73 KB ]
Statement of Management Responsibility
Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2011 and all information contained in these statements rests with the management of the Privy Council Office. These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector.
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 department's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the department'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 Privy Council Office.
The Privy Council Office has an independent Audit Committee. The responsibilities of the Audit Committee are to provide the Privy Council Office with objective guidance on risk management, control framework and reporting practices. The Financial Statements were reviewed by the Audit Committee of the Privy Council Office.
The financial statements of the Privy Council Office have not been audited.
The paper version was signed by
Clerk of the Privy Council and
Secretary to the Cabinet
Assistant Deputy Minister Corporate Services
Ottawa, Canada
August 31, 2011
Statement of Financial Position (Unaudited)
As at March 31
| Assets, Liabilities and Equity | 2011 | Restated (Note 12) 2010 |
|---|---|---|
| Assets | ||
| Financial assets | ||
| Due from the Consolidated Revenue Fund | 16,825 | 15,744 |
| Accounts receivable and advances (note 4) | 1,724 | 1,577 |
| Total financial assets | 18,549 | 17,321 |
| Non-financial assets | ||
| Prepaid expenses | 562 | 752 |
| Tangible capital assets (note 5) | 8,882 | 9,288 |
| Total non-financial assets | 9,444 | 10,040 |
| Total Assets | 27,993 | 27,361 |
| Liabilities | ||
| Accounts payable and accrued liabilities (note 6) | 18,541 | 17,331 |
| Vacation pay and compensatory leave | 5,955 | 5,544 |
| Employee future benefits (note 7) | 19,395 | 17,887 |
| Total liabilities | 43,891 | 40,762 |
| Equity of Canada | (15,898) | (13,401) |
| Total Liabilities and Equity of Canada | 27,993 | 27,361 |
Contractual obligations (note 8)
The accompanying notes form an integral part of the financial statements.
Statement of Operations (Unaudited)
For the year ended March 31
| Type of Operation | Planned Results 2011 |
2011 | 2010 |
|---|---|---|---|
| Expenses | |||
| Prime Minister and Portfolio Ministers Support and Advice | 74,316 | 70,531 | 67,178 |
| Cabinet and Cabinet Committees' Advice and Support | 16,989 | 17,730 | 16,138 |
| Public Service Leadership and Direction | 3,592 | 4,112 | 3,134 |
| Commissions of Inquiry | 110 | 12,980 | 11,303 |
| Internal Services | 72,814 | 77,462 | 78,680 |
| Total Expenses | 167,821 | 182,815 | 176,433 |
| Revenues (note 11) | |||
| Prime Minister and Portfolio Ministers Support and Advice | - | - | - |
| Cabinet and Cabinet Committees' Advice and Support | - | 1 | - |
| Public Service Leadership and Direction | - | - | - |
| Commissions of Inquiry | - | - | - |
| Internal Services | 25 | 8,561 | 11 |
| Total Revenues | 25 | 8,562 | 11 |
| Net cost of operations | 167,796 | 174,253 | 176,422 |
Segmented information (note 10)
The accompanying notes form an integral part of the financial statements.
Statement of Equity of Canada (Unaudited)
For the year ended March 31
| Type of Equity | 2011 | Restated (Note 12) 2010 |
|---|---|---|
| Equity of Canada, beginning of year | (13,401) | (15,425) |
| Net cost of operations | (174,253) | (176,422) |
| Net cash provided by Government | 149,574 | 160,748 |
| Change in due from the Consolidated Revenue Fund | 1,081 | (2,823) |
| Capital assets transfer (from) to Other Government Departments | (20) | - |
| Services provided without charge by other government departments (note 9) | 21,121 | 20,521 |
| Equity of Canada, end of year | (15,898) | (13,401) |
The accompanying notes form an integral part of the financial statements.
Statement of Cash Flow (Unaudited)
For the year ended March 31
| Type of Cash Flow | 2011 | 2010 |
|---|---|---|
| Operating activities | ||
| Net cost of operations | 174,253 | 176,422 |
| Non-cash items: | ||
| Amortization of tangible capital assets (note 5) | (2,487) | (2,339) |
| Gain (loss) on disposal of tangible capital assets | 35 | (33) |
| Tangible capital asset adjustments (note 5) | (118) | 137 |
| Services provided without charge by other government departments (note 9) | (21,121) | (20,521) |
| Variations in Statement of Financial Position: | ||
| Increase in accounts receivable and advances | 147 | 300 |
| Increase (decrease) in prepaid expenses | (190) | 468 |
| Decrease (increase) in accounts payable and accrued liabilities | (1,210) | 2,562 |
| Decrease (increase) in vacation pay and compensatory leave | (411) | 1,006 |
| Decrease (increase) in employee future benefits | (1,508) | 536 |
| Cash used in operating activities | 147,390 | 158,538 |
| Capital investing activities | ||
| Acquisitions of tangible capital assets (note 5) | 2,226 | 2,210 |
| Transfer of tangible capital assets with no monetary impact | 20 | - |
| Proceeds from disposal of tangible capital assets | (62) | - |
| Cash used in capital investing activities | 2,184 | 2,210 |
| Net cash provided by Government of Canada | 149,574 | 160,748 |
The accompanying notes form an integral part of the financial statements.
Notes to the Financial Statements (Unaudited)
For the Year Ended March 31
1. Authority and objectives
The Privy Council Office is a division of the Public Service of Canada as set out in column 1 of Schedule I.1 of the Financial Administration Act and reports to Parliament through the Prime Minister.
The Privy Council Office reports directly to the Prime Minister and is headed by the Clerk of the Privy Council Office and Secretary to the Cabinet. The Clerk is also the Head of the Public Service. The mandate of the Privy Council Office is to serve Canada and Canadians by providing the best non-partisan advice and support to the Prime Minister, ministers within the Prime Minister’s portfolio and Cabinet. Privy Council Office’s work requires close and continuous contact with other federal departments and agencies to support their ability to work effectively and to ensure overall consultation and coordination.
Commissions of Inquiry established under the Inquiries Act are designated as departments under the Financial Administration Act and the Prime Minister is designated as the “appropriate Minister” under that same Act. Privy Council Office provides administrative and financial management support to Commissions of Inquiry. In 2010-2011, Privy Council Office provided support to the following Commissions of Inquiry: the Commission of Inquiry into the Investigation of the Bombing of Air India Flight 182, the Commission of Inquiry into the Actions of Canadian Officials in Relation to Abdullah Almalki, Ahmad Abou-Elmaati and Muayyed Nureddin, the Commission of Inquiry into Certain Allegations Respecting Business and Financial Dealings Between Karlheinz Schreiber and the Right Honourable Brian Mulroney and the Commission of Inquiry into the Decline of Sockeye Salmon in the Fraser River.
To achieve its strategic outcome and to deliver results for Canadians, the Privy Council Office articulates its plans and priorities based on core program activities included below.
1.1 Prime Minister and Portfolio Ministers Support and Advice
The Privy Council Office supports the Prime Minister in carrying out his unique responsibilities as Head of Government. Privy Council Office provides professional and non-partisan advice to the Prime Minister on policies, democratic reform, legislation and parliamentary issues facing the Government; appointments; and machinery of government issues. Privy Council Office, as appropriate, consults with stakeholders, conducts research, and performs a challenge function. Privy Council Office also supports Ministers in the Prime Minister's portfolio. The Prime Minister's Office and the offices of the Portfolio Ministers have budgets to carry out their operations.
1.2 Cabinet and Cabinet Committees' Advice and Support
To ensure the smooth functioning of Cabinet decision-making, Privy Council Office provides policy advice and secretariat support to the Cabinet and Cabinet committees by preparing briefing materials and distributing agendas and cabinet documents. It facilitates integration across the federal community in support of the implementation of the Government’s agenda by departments and agencies. Privy Council Office engages in consultation with departments and agencies, provides a challenge function during the policy development process and researches issues. Privy Council Office also ensures that proposals take into account issues related to implementation, communications, parliamentary affairs and federal-provincial-territorial relations.
1.3 Public Service Leadership and Direction
Privy Council Office sets strategic direction for the Public Service to foster a high performing and accountable Public Service that has the talent, leadership capacity, and management framework to provide advice on and implement the Government’s agenda. It also plays a key role in management development and succession planning for senior leaders in the Public Service.
1.4 Commissions of Inquiry
The Commissions of Inquiry have budgets to carry out their operations. Additionally, Privy Council Office provides financial and administrative support as well as a broad range of expertise to assist Commissions of Inquiry in fulfilling their mandates.
1.5 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; 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. Summary of significant accounting policies
These 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:
- Parliamentary authorities
The Privy Council Office is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Privy Council 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 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 are the amounts reported in the future-oriented financial statements included in the 2010-11 Report on Plans and Priorities. - Net Cash Provided by Government
The Privy Council Office operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Privy Council Office is deposited to the CRF and all cash disbursements made by the Privy Council 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. - Due from the CRF
Amounts due from 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 Privy Council Office is entitled to draw from the CRF without further appropriations to discharge its liabilities. - Revenues
Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenues takes place. - Expenses
Expenses are recorded on the accrual basis:- Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made.
- 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, legal services and workers' compensation coverage are recorded as operating expenses at their estimated cost.
- Employee future benefits
- Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government. The Privy Council Office's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the Privy Council Office to make contributions for any actuarial deficiencies of the Plan.
- 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 derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
- Accounts receivables
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. - Contingent liabilities
Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements. - Tangible capital assets
Tangible capital assets having an initial cost of $5,000 or more are recorded at their acquisition cost. The Privy Council Office does not capitalize intangibles assets, works of art and historical treasures that have cultural, aesthetic or historical value. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.Asset class Amortization Period Machinery and equipment 5 to 15 years Informatics hardware 3 to 5 years Informatics software 3 to 5 years Other equipment 10 to 15 years Motor vehicles 3 to 10 years - 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 items where estimates are used are the allowance of doubtful accounts, the liability for employee severance benefits and the useful life of tangible capital assets. 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 Privy Council Office receives 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 authorities in prior, current or future years. Accordingly, the Privy Council 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:
| Type of Net Cost | 2011 | Restated (Note 12) 2010 |
|---|---|---|
| Net cost of operations | 174,253 | 176,422 |
| Adjustments for items affecting net cost of operations but not affecting authorities: Add (Less): |
||
| Amortization of tangible capital assets (note 5) | (2,487) | (2,339) |
| Gain (loss) on disposal of tangible capital assets | 35 | (33) |
| Services provided without charge by other government departments (note 9) | (21,121) | (20,521) |
| Prepaid expenses previously charged to appropriation | (1,204) | (348) |
| (Increase) decrease in vacation pay and compensatory leave | (411) | 1,006 |
| (Increase) decrease in employee future benefits | (1,508) | 536 |
| Refund of prior years' expenditures | 785 | 1,181 |
| Revenues not available for spending | 8,505 | 11 |
| Tangible capital asset adjustments (note 5) | (118) | 137 |
| Other | 24 | (477) |
| Total | (17,500) | (20,847) |
| Adjustments for items not affecting net cost of operations but affecting authorities: Add (Less): |
||
| Acquisition of tangible capital assets (note 5) | 2,226 | 2,210 |
| Proceeds from disposal of tangible capital assets | (62) | - |
| Prepaid expenses | 1,014 | 816 |
| Total | 3,178 | 3,026 |
| Current year authorities used | 159,931 | 158,601 |
| Type of Authorities | 2011 | 2010 |
|---|---|---|
| Authorities provided: | ||
| Vote - Program expenditures | 151,602 | 153,841 |
| Statutory amounts - Contributions to employee benefits plan | 16,624 | 16,480 |
| Less: | ||
| Appropriations available for future years | (63) | (7) |
| Lapsed authorities | (8,232) | (11,713) |
| Current year authorities used | 159,931 | 158,601 |
4. Accounts receivable and advances
The following table presents details of the Privy Council Office accounts receivable and advances balances:
| Type of Account | 2011 | 2010 |
|---|---|---|
| Receivables from other government departments and agencies | 1,109 | 637 |
| Receivables from external parties | 652 | 979 |
| Employee advances | 27 | 27 |
| Subtotal | 1,788 | 1,643 |
| Less: Allowance for doubtful accounts on external receivables | 64 | 66 |
| Total | 1,724 | 1,577 |
5. Tangible capital assets
Notes:
Net adjustments of $118 thousand is mainly due to the reallocation of expenditures to work in progress and transfer of vehicle to federal departments. Furthermore in 2010 some payable at year end were capitalize or expense and require a reallocation in 2011.
Disposals of work in progress represent assets that were put into use in the year and have been transferred to the other capital asset classes as applicable.
6. Accounts payable and accrued liabilities
The following table presents details of the Privy Council Office accounts payable and accrued liabilities:
| Accounts and liabilities | 2011 | 2010 |
|---|---|---|
| Payables to external parties | 13,909 | 9,823 |
| Payables to other federal government departments and agencies | 3,359 | 6,077 |
| Other liabilities | 773 | 931 |
| Contingent liabilities | 500 | 500 |
| Total | 18,541 | 17,331 |
7. Employee future benefits
- Pension benefits
The Privy Council 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 Privy Council Office contribute to the cost of the Plan. The 2010-11 expense amounts to $14,543,811 ($14,602,525 in 2009-10), which represents approximately 1.9 times (1.9 times in 2009-10) the contributions by employees.
The Privy Council 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
The Privy Council 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:Severance benefits
(in thousands of dollars)Severance benefits 2011 2010 Accrued benefit obligation, beginning of year 17,887 18,423 Expense for the year 3,008 1,283 Benefits paid during the year (1,500) (1,819) Accrued benefit obligation, end of year 19,395 17,887
8. Contractual obligations
The nature of the Privy Council Office's activities can result in some large multi-year contracts and obligations whereby the Privy Council Office will be obligated to make future payments when the goods or services are received. These obligations include service contracts and equipment rental. Contractual obligations are summarized as follows:
| Contractual obligations | 2012 | 2013 | 2014 | 2015 | 2016 and thereafter | Total |
|---|---|---|---|---|---|---|
| Transport and telecommunications | 696 | 157 | 50 | - | - | 903 |
| Information | 162 | 429 | - | - | - | 591 |
| Professional and special services | 8,001 | 529 | 491 | 368 | - | 9,389 |
| Rental | 695 | 471 | 195 | 66 | 29 | 1,456 |
| Purchased repair and maintenance | 508 | 26 | 26 | - | - | 560 |
| Utilities, materials and equipment | 135 | - | - | - | - | 135 |
| Acquisition of machinery and equipment | 508 | - | - | - | - | 508 |
| Total | 10,705 | 1,612 | 762 | 434 | 29 | 13,542 |
9. Related party transactions
The Privy Council Office is related as a result of common ownership to all Government departments, agencies, and Crown Corporations. The Privy Council Office enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Privy Council Office has agreements with the Security and Intelligence Review Committee, the Public Appointments Commission Secretariat related to the provision of finance and administration services. During the year, the Privy Council Office received common services which were obtained without charge from other Government departments as disclosed below:
- Common services provided without charge by other government departments
During the year the Privy Council Office received services without charge from certain common service organizations, related to accommodation, legal services, 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 department's Statement of Operations as follows:
Common services provided without charge by other government departments
(in thousands of dollars)Service 2011 2010 Accommodation 12,704 12,031 Employer’s contribution to the health and dental insurance plans 8,416 8,173 Legal services - 319 Worker’s compensation coverage 1 (2) Total 21,121 20,521
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 Privy Council Office's Statement of Operations. - Other transactions with related parties
Other transactions with related parties
(in thousands of dollars)Transactions 2011 2010 Expenses - Other Government departments and agencies 32,138 29,184
10. Segmented Information
Presentation by segment is based on the Privy Council Office'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 revenues 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:
11. Additional Information on Privy Council Office's Revenues
The nature of the Privy Council Office's activity does not generate any significant revenues and is mainly generated from gain of disposal of assets and fees related to Access to Information.
However on August 6, 2010, the Leader of the Government in the House of Commons was appointed as the appropriate Minister for the Canada Lands Company Limited. The Canada Lands Company Limited is a federal crown corporation partially funded by government authority and pays yearly dividends to the federal government. Since the Leader of the Government in the House of Commons is a Minister within the Prime Minister's Portfolio, the Canada Lands Company Limited dividend payments are submitted to the Privy Council Office even though these dividend revenues are not generated from departmental activities. As a result, the Privy Council Office's revenues include dividend revenues in the amount of $8.5M for fiscal year 2010-11.
12. Adoption of new accounting policies
During the year, the Privy Council Office adopted the revised Treasury Board accounting policy TBAS 1.2: Departmental and Agency Financial Statements which is effective for the Privy Council Office for the 2010-11 fiscal year. The major change in the accounting policies of the Privy Council Office required by the adoption of the revised TBAS 1.2 is the recording of amounts due from the Consolidated Revenue Fund as an asset on the Statement of Financial Position.
The adoption of the new Treasury Board accounting policies have been accounted for retroactively with the following impact on the comparative figures for 2009-10:
| Statement of Financial Position | 2010 As previously stated |
Effect of the adjustment |
2010 Revised amount |
|---|---|---|---|
| Assets | 11,617 | 15,744 | 27,361 |
| Equity of Canada | (29,145) | 15,744 | (13,401) |
13. Comparative information
Comparative figures have been reclassified to conform to the current year’s presentation.