Future-Oriented Financial Statements for the Years Ending March 31, 2011 and March 31, 2012 (Privy Council Office)

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Statement of Management Responsibility

Departmental management is responsible for these future-oriented financial statements, 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 December 23, 2010 and reflect the plans described in the Report on Plans and Priorities.

The paper version was signed by

Wayne G. Wouters
Clerk of the Privy Council and
Secretary to the Cabinet
Marilyn MacPherson
Assistant Deputy Minister
Corporate Services

Ottawa, Ontario
January 24, 2011


Privy Council Office
Future-Oriented Statement of Financial Position (Unaudited)


As at March 31

Assets

($ in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Financial assets    
Due from Consolidated Revenue Fund 15,246 14,364
Accounts receivable and advances (Note 6) 1,217 1,097
Total financial assets 16,463 15,461
     
Non-financial assets    
Prepaid expenses 641 674
Tangible capital assets (Note 7) 8,955 8,059
Total non-financial assets 9,596 8,733
Total 26,059 24,194

Liabilities and Equity of Canada

($ in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Liabilities    
Accounts payable and other liabilities (Note 8) 17,425 15,845
Vacation pay and compensatory leave 5,639 5,172
Employee future benefits (Note 9) 18,193 16,688
Total liabilities 41,257 37,705
     
Equity of Canada (15,198) (13,511)
     
Total 26,059 24,194

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to November 30, 2010. The information for the remainder of the fiscal year 2010-11 and for fiscal year 2011-12 is based on estimates.

Contractual obligations (Note 10).

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


Privy Council Office
Future-Oriented Statement of Operations (Unaudited)


For the Year Ending March 31

(in thousands of dollars)
Expenses (Note 12) Estimated Results
2011
Forecast
2012
Prime Minister and portfolio ministers’ support and advice 71,419 66,199
Cabinet and Cabinet committees’ advice and support 18,086 17,395
Public service leadership and direction 3,933 3,644
Commissions of Inquiry 15,096 291
Internal Services 77,487 74,083
     
Total Expenses 186,021 161,612
Revenues (Note 12 and 13)    
Prime Minister and portfolio ministers’ support and advice - -
Cabinet and Cabinet committees’ advice and support 1 1
Public service leadership and direction - -
Commissions of Inquiry - -
Internal Services 8,584 9,051
     
Total Revenues 8,585 9,052
Net Cost of Operations 177,436 152,560

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to November 30, 2010. The information for the remainder of the fiscal year 2010-11 and for fiscal year 2011-12 are based on estimates.

Segmented information (Note 12).

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


Privy Council Office
Future-Oriented Statement of Equity of Canada (Unaudited)


For the Year Ending March 31

(in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Equity of Canada, beginning of year (14,212) (15,198)
Net cost of operations (177,436) (152,560)
Net cash provided by Government 154,598 134,099
Change in due to/from the Consolidated Revenue Fund 313 (882)
Services provided without charge by other government departments (Note 11) 21,539 21,030
Equity of Canada, end of year (15,198) (13,511)

Information for the year ended March 31, 2011 includes actual amounts from April 1, 2010 to November 30, 2010. The information for the remainder of the fiscal year 2010-11 and for fiscal year 2011-12 are based on estimates.

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


Privy Council Office
Future-Oriented Statement of Cash Flow (Unaudited)


For the Year Ending March 31

(in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Operating Activities
     
Net cost of operations 177,436 152,560
     
Non-cash items:    
Amortization of tangible capital assets (Note 7) (2,347) (2,417)
Gain (Loss) on disposal of tangible capital assets (54) (45)
Tangible capital asset transfers (Note 7) 12 -
Other (Note 7) 213 60
Services provided without charge by other government departments (Note 11) (21,539) (21,030)
  (23,715) (23,432)
     
Variations in Statement of Financial Position:    
Increase (decrease) in accounts receivable and advances (360) (120)
Increase (decrease) in prepaid expenses (111) 33
(Increase) decrease in liabilities:    
Accounts payable and other liabilities (94) 1,580
Vacation pay and compensatory leave (95) 467
Future-employee benefits (306) 1,505
  (966) 3,465
     
Cash used in operating activities 152,755 132,593
     
Capital Investing Activities:    
Acquisition of tangible capital assets (Note 7) 1,867 1,506
Proceeds from disposal of tangible capital assets (24) -
Cash used in capital investing activities 1,843 1,506
     
Net cash provided by Government of Canada 154,598 134,099

Information for the year ended March 31, 2011 includes amounts from April 1, 2010 to November 30, 2010. The information for the remainder of the fiscal year 2010-11 and for fiscal year 2011-12 are based on estimates.

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


Privy Council Office
Notes to Future-oriented Financial Statements (Unaudited)


For the Year Ending 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 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. The Privy Council Office provides administrative and financial management support to commissions. In 2010-11, the Privy Council Office provides support to the following commissions: 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.

2. Significant Assumptions

The future-oriented financial statements have been prepared on the basis of government priorities and the plans of the Privy Council Office as described in the Report on Plans and Priorities.

The main assumptions are as follows:

  1. The Privy Council Office's activities will remain substantially the same as for the previous year.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on forecasted or historical information. The general historical pattern is expected to continue.
  3. Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.

These assumptions are adopted as at December 23, 2010.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2010-11 and for 2011-12, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these financial statements, the Privy Council Office has made estimates and assumptions concerning the future. These estimates and judgments may differ from the subsequent actual results. Estimates and judgments 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 statements and the historical financial statements include:

  1. The timing and number of equipment acquisitions and disposals may affect gains/losses and amortization expenses.
  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 Privy Council Office will not be updating the forecasts for any changes to authorities or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

These future-oriented financial statements have been prepared in accordance with 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:

  1. Parliamentary authorities - The Privy Council Office is financed by the Government of Canada through Parliamentary authorities. The cash accounting basis is used to recognize transactions affecting parliamentary authorities. The future-oriented financial statements are based on accrual accounting. Consequently, items presented in the Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.
  2. 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.
  3. 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 Privy Council Office is entitled to draw from the CRF without further appropriations to discharge its liabilities.
  4. Revenues - are presented on an accrual basis:
    • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
    • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
  5. Expenses - are presented on an 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 expensed as the benefits accrue to employees under their respective terms of employment.
    • Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, legal services and workers' compensation are reported as operating expenses at their estimated cost.
  6. Employee future benefits
    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer 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.
    2. 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.
  7. 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.
  8. 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 future-oriented financial information.
  9. Tangible capital assets - All 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, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

    Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

    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

    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.

5. Parliamentary Authorities

The Privy Council Office receives most of its funding through expenditure authorities provided by Parliament. 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:

a) Authorities requested

(in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Authorities requested:    
Vote 1 Program Expenditures 145,883 124,341
Vote 15 Compensation Adjustments 195 -
Vote 25 Operating Budget Carry Foward 5,781 -
Vote 30 Paylist Requirements 2,709 2,820
Statutory amounts 15,935 16,855
Forecast authorities available 170,503 144,016

Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts requested in the 2011-12 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31, 2011 include amounts presented in the 2010-11 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.

b) Reconciliation of net cost of operations to requested authorities:

(in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Net cost of operations 177,436 152,560
Adjustments for items affecting net cost of operations but not affecting authorities:    
Add (less):    
Amortization of tangible capital assets (2,347) (2,417)
Gain (loss) on disposal of tangible capital assets (54) (45)
Services provided without charge by other government departments (Note 11) (21,539) (21,030)
Prepaid expenses (1,112) (965)
Vacation pay and compensatory leave (95) 467
Employee future benefits (306) 1,505
Refund of prior years’ expenditures 169 169
Revenue not available for spending (Note 13) 8,585 9,052
Other 175 560
  (16,524) (12,704)
Adjustments for items not affecting net cost of operations but affecting authorities:    
Add:    
Acquisition of tangible capital assets 1,867 1,506
Acquisition of prepaid expenses 1,001 998
  2,868 2,504
Forecast current year lapse 4,989 -
Other anticipated additional authorities 1,734 1,656
  6,723 1,656
Forecast authorities available 170,503 144,016

6. Accounts receivables and advances

(in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Receivables from other government departments and agencies 814 647
Receivables from external parties 450 449
Employee advances 30 30
Subtotal 1,294 1,126
Less: Allowance for doubtful accounts on receivables from external parties (77) (29)
Total 1,217 1,097

7. Tangible capital assets

Tangible capital assets

8. Accounts payable and accrued liabilities

(in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Accounts payable to other government departments and agencies 5,198 5,684
Accounts payable to external parties 11,017 9,451
Subtotal 16,215 15,135
Accrued liabilities 1,210 710
Total 17,425 15,845

9. Employee benefits

a) 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 department contribute to the cost of the Plan. The forecast expenses are $14,962,809 in 2010-11 and $14,532,179 in 2011-12, representing approximately 1.9 times the contributions of 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.

b) 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, estimated as at the date of these statements, is as follows:

(in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Accrued benefits obligation, beginning of year 17,886 18,193
Expense for the year (1,477) (3,339)
Expected benefits payments during the year 1,784 1,834
Accrued benefits obligation, end of year 18,193 16,688

10. 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 services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)
  2011 2012 2013 2014 2015 and thereafter Total
Privy Council Office            
Salaries and employee benefits 570 - - - - 570
Transport and telecommunications 1,372 192 156 49 - 1,769
Information 863 377 - - - 1,240
Professional and special services 3,557 777 21 306 - 4,661
Rental 509 1,492 441 - 62 2,504
Purchased repair and maintenance 1,612 26 26 26 - 1,690
Utilities, materials and equipment 224 - - - - 224
Acquisition of machinery and equipment 1,147 19 - - - 1,166
Other - - - - - -
Sub-Total 9,854 2,883 644 381 62 13,824
Commissions of Inquiry            
Transport and telecommunications 43 - - - - 43
Information 49 - - - - 49
Professional and special services 2,572 138 - - - 2,710
Rental 40 4 1 - - 45
Purchased repair and maintenance 410 - - - - 410
Utilities, materials and equipment 7 - - - - 7
Acquisition of machinery and equipment 2 - - - - 2
Transfer payments 760 - - - - 760
Sub-Total 3,883 142 1 - - 4,026
Total 13,737 3,025 645 381 62 17,850

11. Related Party Transactions

The Privy Council Office is related, as a result of common ownership, to all Government of Canada 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, the Old Port of Montreal Corporation and the Canada Lands Company Limited 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:

(a) Common services provided without charge by other government departments

During the year, the Privy Council Office is forecasted to receive services without charge from certain other departments, accommodation, legal fees, workers’ compensation coverage and the employer’s contribution to the health and dental insurance plans. These services without charge have been recognized in the Privy Council Office’s future-oriented Statement of Operations as follows:

(in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Accommodation 12,815 12,994
Employer’s contribution to the health and dental insurance plans 8,316 7,628
Legal services 403 403
Worker’s compensation coverage 5 5
Total 21,539 21,030

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all, without charge. The costs of theses services, which include 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 as an expense in the Privy Council Office’s Statement of Operations.

(b) Other transactions with related parties:

(in thousands of dollars)
  Estimated Results
2011
Forecast
2012
Expenses - Other Government departments and agencies 29,937 31,556
Revenues - Other Government departments and agencies - -

12. 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 4. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and major type of revenues. The segment results for the period are as follows:

  2011 2012
  Total Prime Minister and portfolio ministers’ support and advice Cabinet and Cabinet committees’ advice and support Public Service leadership and direction Commissions of Inquiry Internal Services Total
Expenses              
Salaries and employee benefits 123,858 56,885 15,472 3,382 (172) 36,656 112,223
Professional and special services 19,637 3,762 1,037 185 138 9,892 15,014
Accommodation 13,318 - - - 124 12,994 13,118
Transportation and telecommunications 8,179 3,352 457 43 51 2,408 6,311
Acquisition of machinery and equipment 5,472 171 35 - - 4,253 4,459
Purchased repair and maintenance 2,836 52 13 - 16 2,112 2,193
Information 2,789 720 196 8 125 1,096 2,145
Amortization of tangible capital assets (Note 7) 2,347 88 - - - 2,329 2,417
Rental 1,664 826 140 22 4 259 1,251
Utilities, materials and equipment 1,926 292 42 4 5 1,110 1,453
Transfer payments 2,824 - - - - - -
Loss on disposal of tangible capital assets 54 - - - - 45 45
Other 1,117 51 3 - - 929 983
Total Expenses 186,021 66,199 17,395 3,644 291 74,083 161,612
Revenues              
Gain on Disposal of Tangible Capital Assets 75 - - - - 45 45
Miscellaneous Revenues 10 - 1 - - 6 7
Dividend - Canada Lands (Note 13) 8,500 - - - - 9,000 9,000
Total Revenues 8,585 - 1 - - 9,051 9,052
Net Cost of Operations 177,436 66,199 17,394 3,644 291 65,032 152,560

13. 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 pay 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 forecast revenues include dividend revenues in the amount of $8.5M for fiscal year 2010-11 and $9M for 2011-12.