Financial Statements for the year ended March 31, 2012 (Unaudited) - Public Appointments Commission Secretariat

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Statement of Management Responsibility including Internal Control Over Financial Reporting

The Privy Council Office (PCO) provides administrative and financial services to the Public Appointments Commission Secretariat (PACS) and as such, these financial statements have been prepared by PCO on behalf of PACS using the Government's accounting policies which are based on Canadian public sector accounting standards. Although PCO's Chief Financial Officer attests to the quality of the financial information contained in these statements, the responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2012, and all information contained in these statements rests with PACS management.

PACS 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 assist PACS to fulfill its accounting and reporting responsibilities, PCO management maintains a set of accounts that provides a centralized record of the Public Appointments Commission Secretariat's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Public Appointments Commission Secretariat's Departmental Performance Report, is consistent with these financial statements.

PACS 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.

PCO management, on behalf of PACS, 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 Public Appointments Commission Secretariat and through conducting an annual 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 the associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system ICFR for the year ended March 31, 2012 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The financial statements of the Public Appointments Commission Secretariat have not been audited.

Michelle Doucet
Chief Financial Officer
Privy Council Office

Ottawa, Ontario
August 31, 2012

Statement of Financial Position (Unaudited)

As at March 31

(in thousands of dollars)
2012 2011
Liabilities
Due to the Consolidated Revenue Fund - 21
Accounts payable (note 4) 19 73
Total net liabilities 19 94
Assets
Financial assets
Due from Consolidated Revenue Fund 19 -
Accounts receivable and advances (note 6) - 93
Total net financial assets 19 93
Departmental net debt - 1
Departmental net financial position - (1)

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

Statement of Operations and Departmental Net Financial Position (Unaudited)

For the year ended March 31

(in thousands of dollars)
Planned
Results
2012		 2012 Restated
(note 9)
2011
Expenses
Oversight of the Government-in-Council appointments 1,133 120 216
Internal Services 255 118 143
Total Expenses 1,388 238 359
Net cost of operations before government funding and transfers 1,388 238 359
Government funding and transfers
Net cash provided by Government - 96 240
Change in due from the Consolidated Revenue Fund - 40 52
Services provided without charge by other government departments (note 7) - 103 111
Net cost of operations after government funding and transfers - (1) (44)
Departmental net financial position - Beginning of year - (1) (45)
Departmental net financial position - End of year - - (1)

Segmented information (note 8).

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

Statement of Change in Departmental Net Debt (Unaudited)

For the year ended March 31

(in thousands of dollars)
2012 2011
Net cost of operations after government funding and transfers (1) (44)
Net increase (decrease) in departmental net debt (1) (44)
Departmental net debt - Beginning of year 1 45
Departmental net debt - End of year - 1

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

Statement of Cash Flows (Unaudited)

For the year ended March 31

(in thousands of dollars)
2012 2011
Operating activities
Net cost of operations before government funding and transfers 238 359
Non-cash items:
Services provided without charge by other government departments (note 7) (103) (111)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances (93) 1
Decrease (increase) in accounts payable 54 (54)
Decrease (increase) in employee future benefits - 45
Cash used in operating activities 96 240
Net cash provided by Government of Canada 96 240

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 Public Appointments Commission Secreteriat (PACS) was established by Order-in-Council number PC 2006-0228, on April 21, 2006. The Secretariat was created to prepare the ground for the establishment of the Public Appointments Commission, and once established, to provide ongoing support. The mandate of the Commission and its Secretariat is described in the Federal Accountability Act.

The Commission and its Secretariat are within the portfolio of the Prime Minister, reflecting the prerogative of the Prime Minister wih respect to Governor-in-Council appointments.

To achieve its strategic outcome and to deliver results for Canadians, PACS articulates its plans and priorities based on core program activities included below.

1.1 Oversight of Governor-in-Council appointments

Oversight of Governor-in-Council appointments contributes to the achievement of the Government of Canada outcome, ''Wellmanaged and efficient government operations,'' by helping to ensure that, if the Commission is established, selection processes for Governor-in-Council appointments are fair and competency based.

1.2 Internal services

Internal services program activities support the effective and efficient delivery of activities under Program Activity 1.

Recently, the Government announced that the Public Appointments Commission (PAC) will not be constituted and that the Public Appointments Commission Secretariat (PACS) will not be continuing operations beyond fiscal year 2011-12. Normally, when an organization ceases its operations, a revaluation of its assets and liabilities is required. However since the Public Appointments Commission Secretariat has no assets and liabilities other than the Due from Consolidated Revenue Fund and that the liabilities will be settled during the next fiscal year a revaluation will not be required.

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:

  1. Parliamentary authorities

    The Public Appointments Commission Secreteriat is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Public Appointments Commission Secretariat 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.
  2. Net Cash Provided by Government

    The Public Appointments Commission Secretariat operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Public Appointments Commission Secretariat is deposited to the CRF, and all cash disbursements made by the Public Appointments Commission Secreteriat 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.
  3. 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 Public Appointments Commission Secretariat is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. Expenses

    Expenses are recorded on the accrual basis:
    • 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.
  5. Employee future benefits

    • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government. The Public Appointments Commission Secretariat's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Public Appointments Commission Secretariat'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.
  6. 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.
  7. Measurement uncertainty

    The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated. Management's estimates are reviewed and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary Authorities

The Public Appointments Commission Secretariat 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 Public Appointments Commission Secretariat 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 thousands of dollars)
2012 2011
Net cost of operations before government funding and transfers 238 359
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (note 7) (103) (111)
(Increase) decrease in employee future benefits - 45
Refund of prior years' expenditures - 1
(103) (65)
Current year authorities used 135 294

(b) Authorities provided and used

(in thousands of dollars)
2012 2011
Authorities provided:
Vote - Program expenditures 992 992
Statutory amounts - Contributions to employee benefits plan 16 26
Less:
Lapsed authorities (873) (724)
Current year authorities used 135 294

4. Accounts payable

The following table presents details of the Public Appointments Commission Secretariat's accounts payable:

(in thousands of dollars)
2012 2011
Accounts payable - External parties - 8
Accounts payable - Other government departments and agencies 19 65
Total accounts payable 19 73

5. Employee future benefits

  1. Pension benefits

    The Public Appointments Commission Secretariat'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 Public Appointments Commission Secretariat contribute to the cost of the Plan. The 2011-12 expense amounts to $14,053 ($23,174 in 2010-11), which represents approximately 1,8 times (1,9 times in 2010-11) the contributions by employees.

    The Public Appointments Committee Secretariat'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.
  2. Severance benefits

    The Public Appointments Commission Secretariat 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:

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

    (in thousands of dollars)
    2012 2011
    Accrued benefit obligation - Beginning of year - 45
    Expense for the year - (45)
    Accrued benefit obligation - End of year - -

6. Accounts receivable and advances

The following table presents details of the Public Appointments Commission Secretariat's accounts receivable and advances balances:

(in thousands of dollars)
2012 2011
Receivables - Other government departments and agencies - 93
Net accounts receivable - 93

7. Related party transactions

The Public Appointments Commission Secretariat is related as a result of common ownership to all government departments, agencies, and Crown Corporations. The Public Appointments Commission Secretariat enters into transactions with these entities in the normal course of business and on normal trade terms.

In addition, the Public Appointments Commission Secretariat has an agreement with the Privy Council Office related to the provision of finance and administration services which is included in section b). During the year, the Public Appointments Commission Secretariat received common services which were obtained without charge from other government departments as disclosed below.

  1. Common services provided without charge by other government departments

    During the year, the Public Appointments Commission Secretariat received services without charge from certain common 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 Public Appointments Commission Secretariat's Statement of Operations and Departmental Net Financial Position as follows:

    (in thousands of dollars)
    2012 2011
    Accommodation 95 94
    Employer’s contribution to the health and dental insurance plans 8 17
    Total 103 111

    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 Public Appointments Commission Secreteriat's Statement of Operations and Departmental Net Financial Position.
  2. Other transactions with related parties

    (in thousands of dollars)
    2012 2011
    Expenses - Other Government departments and agencies 126 248

    Expenses 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 Public Appointments Commission Secretariat'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 for the main program activities, and by major object of expense. The segment results for the period are as follows:

(in thousands of dollars)
Oversight of the
Governor-in-Council
appointments		 Internal Services 2012 2011
Expenses
Salaries and employee benefits 111 8 119 199
Professional and special services 9 15 24 57
Accommodation - 95 95 94
Other - - - 9
Total Expenses 120 118 238 359
Net cost of operations 120 118 238 359

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 amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to the Public Appointments Commission Secretariat’s financial statements are described below. These changes have been applied retroactively, and comparative 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 Public Appointments Commission Secretariat now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

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 Public Appointments Commission Secretariat recognized these transactions directly in the Statement of Equity of Canada.

(in thousands of dollars)
  2011
As previously
stated		 Effect
of the
adjustment		 2011
Restated
Statement of Operations and Departmental Net Financial Position
Government funding and transfers
Net cash provided by Government - 240 240
Change in due from Consolidated Revenue Fund - 52 52
Services provided without charge by other government depatrments - 111 111

10. Comparative information

Comparative figures have been reclassified to conform to the current year’s presentation.