Future-Oriented Financial Statements for the Years Ending March 31, 2012 and March 31, 2013 (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 31, 2011 and reflect the plans described in the Report on Plans and Priorities.

These statements have not been subject to an external audit or review but have been reviewed by the Privy Council Office Audit Committee.

The paper version was signed by

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

Ottawa, Canada


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


For the Year Ending March 31

Assets

(in thousands of dollars)
Estimated Results
2012
Planned Results
2013
Financial assets
Due from the Consolidated Revenue Fund 14,088 10,205
Accounts receivable and advances
(Note 6)
978 628
Total financial assets 15,066 10,833
Non-financial assets
Prepaid expenses 590 700
Tangible capital assets (Note 7) 5,632 5,090
Total non-financial assets 6,222 5,790
Total 21,288 16,623

Liabilities and Equity of Canada

(in thousands of dollars)
Estimated Results
2012
Planned Results
2013
Liabilities
Accounts payable and other liabilities
(Note 8)
15,086 10,735
Vacation pay and compensatory leave 5,758 5,002
Employee future benefits (Note 9) 7,563 6,569
Total liabilities 28,407 22,306
Equity of Canada (7,119) (5,683)
Total 21,288 16,623

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011. The information for the remainder of the fiscal year 2011-12 and for fiscal year 2012-13 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)
Estimated Results
2012
Planned Results
2013
Expenses (Note 12)
Prime Minister and portfolio ministers’ support and advice 65,589 66,742
Cabinet and Cabinet committees’ advice and support 18,861 15,688
Public service leadership and direction 4,600 3,998
Commissions of Inquiry 12,712 1,145
Internal Services 68,819 62,102
Total Expenses 170,581 149,675
Revenues (Note 12)
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 119 125
Total Revenues 120 126
Net Cost of Operations without Shared Services Canada 170,461 149,549
Expenses - Related to Shared Services Canada (Note 11) 3,426 -
Net Cost of Operations 173,887 149,549

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011. The information for the remainder of the fiscal year 2011-12 and for fiscal year 2012-13 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
2012
Planned Results
2013
Equity of Canada, beginning of year (15,898) (7,119)
Net cost of operations (173,887) (149,549)
Net cash provided by Government 166,192 134,032
Change in due to/from the Consolidated Revenue Fund (2,737) (3,883)
Capital assets transfer (from) to Other Government Departments (Note 13) (2,746) -
Services provided without charge by other government departments (Note 11) 21,957 20,836
Equity of Canada, end of year (7,119) (5,683)

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011. The information for the remainder of the fiscal year 2011-12 and for fiscal year 2012-13 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
2012
Planned Results
2013
Operating Activities
Net cost of operations 173,887 149,549
Non-cash items:
Amortization of tangible capital assets (Note 7) (1,999) (1,474)
Gain (Loss) on disposal of tangible capital assets 29 44
Tangible capital asset adjustments (2,785) -
Services provided without charge by other government departments (Note 11) (21,957) (20,836)
(26,712) (22,266)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances (746) (350)
Increase (decrease) in prepaid expenses 28 110
(Increase) decrease in liabilities:
Accounts payable and other liabilities 3,455 4,351
Vacation pay and compensatory leave 197 756
Future-employee benefits 11,832 994
14,766 5,861
Cash used in operating activities 161,941 133,144
Capital Investing Activities:
Acquisition of tangible capital assets (Note 7) 1,549 938
Transfer of tangible capital assets with no monetary impact 2,746 -
Proceeds from disposal of tangible capital assets (44) (50)
Cash used in capital investing activities 4,251 888
Net cash provided by Government of Canada 166,192 134,032

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011. The information for the remainder of the fiscal year 2011-12 and for fiscal year 2012-13 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. The Privy Council Office currently provides support to the Commission of inquiry into the Decline of Sockeye Salmon in the Fraser River.

2. Methodology and 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 the previous year to the exception of the transfer of a portion of PCO's information technology activities to Shared Services Canada and the sunsetting of some initiatives.
  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.
  4. Estimated year end information for 2011-12 is used as the opening position for the 2012-13 planned results.

These assumptions are adopted as at December 31, 2011.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to 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 these future-oriented financial statements, the Privy Council Office has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions 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 amounts of equipment acquisitions and disposals may affect gains/losses and amortization expenses.
  2. Implementation of new collective agreements.
  3. 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 in effect for the 2011-2012 fiscal year. These accounting policies, stated below, 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. Financial reporting of authorities provided to the department do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. 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 parliamentary expenditures authorities to discharge its liabilities.
  4. Revenues - are recorded 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 recorded 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 accrued as the benefits are earned 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, workers' compensation and other services 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 statements.
  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.

  10. Measurement uncertainty - The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the futureoriented 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.

5. Parliamentary Authorities

The Privy Council Office receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the future-oriented statements of operations and 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)
Authorities requested Estimated Results
2012
Planned Results
2013
Vote 1 Program Expenditures 133,433 110,950
Vote 15 Compensation Adjustments 25 -
Vote 22 Operating Budget Carry Foward 6,284 -
Vote 30 Paylist Requirements 11,988 3,096
Statutory amounts 18,040 16,363
Forecast authorities available 169,770 130,409

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.

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

(in thousands of dollars)
Operations Estimated
2012
Planned
2013
Net cost of operations 173,887 149,549
Adjustments for items affecting net cost of operations
but not affecting authorities:
Add (less):
Amortization of tangible capital assets (1,999) (1,474)
Gain (loss) on disposal of tangible capital assets 29 44
Services provided without charge by other government departments (Note 11) (21,957) (20,836)
Prepaid expenses (882) (792)
Vacation pay and compensatory leave 197 756
Employee future benefits 11,832 994
Refund of prior years’ expenditures 100 100
Revenue not available for spending 8 7
Tangible capital asset adjustments (2,785) -
Other 3,137 271
(12,320) (20,930)
Adjustments for items not affecting net cost of operations
but affecting authorities:
Add:
Acquisition of tangible capital assets 1,549 938
Proceeds from disposal of tangible capital assets (44) (50)
Acquisition of prepaid expenses 910 902
2,415 1,790
Forecast current year lapse 5,788 -
Forecast authorities available 169,770 130,409

6. Accounts receivables and advances

The following table presents details of the Privy Council Office's accounts receivable and advances balances:

(in thousands of dollars)
Estimated Results
2012
Planned Results
2013
Receivables from other government departments and agencies 797 533
Receivables from external parties 178 72
Employee advances 21 23
Subtotal 996 628
Less: Allowance for doubtful accounts on receivables from external parties (18) -
Total 978 628

7. Tangible capital assets

Tangible capital assets

8. Accounts payable and accrued liabilities

The following table presents details of the Privy Council Office's accounts payable and accrued liabilities:

(in thousands of dollars)
Estimated Results
2012
Planned Results
2013
Accounts payable to other government departments and agencies 2,514 1,922
Accounts payable to external parties 12,294 8,742
Subtotal 14,808 10,664
Accrued liabilities 278 71
Total 15,086 10,735

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 $16,918,455 in 2011-12 and $14,029,448 in 2012-13, 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
2012
Planned Results
2013
Accrued benefits obligation, beginning of year 19,395 7,563
Expense for the year (22,396) (2,798)
Expected benefits payments during the year 10,564 1,804
Accrued benefits obligation, end of year 7,563 6,569

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)
Privy Council Office 2012 2013 2014 2015 2016 and thereafter Total
Salaries and employee benefits 212 - - - - 212
Transport and telecommunications 581 657 50 - - 1,288
Information 1,386 1,389 850 - - 3,625
Professional and special services 4,111 1,157 130 45 45 5,488
Rental 432 522 242 121 59 1,376
Purchased repair and maintenance 619 130 - - - 749
Utilities, materials and equipment 178 3 - - - 181
Acquisition of machinery and equipment 840 11 2 - - 853
Transfer payment 2,038 - - - - 2,038
Other - - - - - -
Total 10,397 3,869 1,274 166 104 15,810

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 and the Public Appointments Commission Secretariat related to the provision of finance and administration services.

As of November 15, 2011, the department transferred its information technologies activities to Shared Service Canada (SSC). During the transition period, the department continued to administer those activities on behalf of SSC. The administered expenses for the period of November 15, 2011 to March 31, 2012 amounted to $4,112,526 and are not recorded in these financial statements. However, the expenses for the period starting April 1 to November 14, 2011 are totalling $3,425,777 and is shown separately in our statement of operations.

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 receives services without charge from certain common service organizations, related to 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 department's future-oriented statement of operations as follows:

(in thousands of dollars)
Estimated Results
2012
Planned Results
2013
Accommodation 13,079 13,307
Employer’s contribution to the health and dental insurance plans 8,877 7,528
Worker’s compensation coverage 1 1
Total 21,957 20,836

The Government has centralized some of its administrative activities for efficiency, costeffectiveness 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 and audit services provided by the Office of the Auditor General are not included in the Privy Council Office's future-oriented statement of operations.

(b) Other transactions with related parties:

(in thousands of dollars)
Estimated Results
2012
Planned Results
2013
Expenses - Other Government departments and agencies 33,583 28,887
Revenues - Other Government departments and agencies 75 74

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:

Segmented information table

13. Transfers from/to other government departments

Effective November 15, 2011, the Privy Council Office transferred responsibility for a portion of the information technologies activities to Shared Services Canada in accordance with the Order in Council P.C. 2011-1297, including the stewardship responsibility for the assets and liabilities related to the program. Accordingly, the Privy Council Office transferred the following assets and liabilities related to part of the information technologies activities to Shared Services Canada on November 15, 2011:

(in thousands of dollars)
Estimated Results
2012
Assets
Tangible capital assets (net book value) 2,746
2,746
Liabilities
Accounts payable and accrued liabilities 577
Vacation pay and compensatory leave 55
Employee future benefits 187
819
Adjustment to Equity of Canada 1,927