Future-Oriented Financial Statements for the Years Ending March 31, 2013 and March 31, 2014 (Privy Council Office)

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Future-Oriented Financial Statements (Unaudited)


For the year ending March 31

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 September 30, 2012 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
February 13, 2013


Future-Oriented Statement of Financial Position (Unaudited)


As at March 31

(in thousands of dollars)
  Estimated Results
2013
Planned Results
2014
Liabilities
Accounts payable and accrued liabilities (note 6) 11,612 10,324
Vacation pay and compensatory leave 5,412 4,955
Employee future benefits (note 7) 7,143 6,540
Total net liabilities 24,167 21,819
Assets
Financial assets
Due from Consolidated Revenue Fund 11,130 9,751
Accounts receivable and advances (note 8 ) 644 552
Total net financial assets 11,774 10,303
Departmental net debt 12,393 11,516
Non-financial assets
Prepaid expenses 526 482
Tangible capital assets (note 9) 4,788 4,341
Total non-financial assets 5,314 4,823
Departmental net financial position (7,079) (6,693)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to September 30, 2012. The information for the remainder of the fiscal year 2012-13 and for fiscal year 2013-14 are based on estimates.

Contractual obligations (note 10)

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

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
February 13, 2013


Future-Oriented Statement of Operations and Departmental Net Financial Position (Unaudited)


For the year ending March 31

(in thousands of dollars)
  Estimated Results
2013
Planned Results
2014
Expenses
Prime Minister and portfolio ministers’ support and advice 65,458 66,821
Cabinet and Cabinet committees’ advice and support 18,444 15,626
Public service leadership and direction 2,250 2,408
Commissions of Inquiry 2,526 -
Internal Services 64,256 62,335
Total Expenses 152,934 147,190
Revenues
Miscellaneous 30 31
Internal Services Support 49 49
Revenues earned on behalf of Government (8) (9)
Total Revenues 71 71
Net cost operations before government funding and transfers 152,863 147,119
Government funding and transfers
Net cash provided by Government 136,542 127,962
Change in due from Consolidated Revenue Fund (690) (1,379)
Services provided without charge by other government departments (note 11) 21,554 20,922
Transfer of tangible capital assets from (to) other government departments (742) -
Net cost of operations after government funding and transfers (3,801) (386)
Departmental net financial position - Beginning of year (10,880) (7,079)
Departmental net financial position - End of year (7,079) (6,693)

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to September 30, 2012. The information for the remainder of the fiscal year 2012-13 and for fiscal year 2013-14 are based on estimates.

Segmented information (note 12)

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


Future-Oriented Statement of Change in Departmental Net Debt (Unaudited)


For the year ending March 31

(in thousands of dollars)
  Estimated Results
2013
Planned Results
2014
Net cost of operations after government funding and transfers (3,801) (386)
Change due to tangible capital assets (note 9)
Acquisition of tangible capital assets 1,075 800
Amortization of tangible capital assets (1,335) (1,241)
Proceeds from disposal of tangible capital assets (32) (28)
Net (loss) or gain on disposal of tangible capital assets (8) 22
Transfer to other government departments (742) -
Total change due to tangible capital assets (1,042) (447)
Change due to prepaid expenses 25 (44)
Net increase (decrease) in departmental net debt (4,818) (877)
Departmental net debt - Beginning of year 17,211 12,393
Departmental net debt - End of year 12,393 11,516

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to September 30, 2012. The information for the remainder of the fiscal year 2012-13 and for fiscal year 2013-14 are based on estimates.

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


Future-Oriented Statement of Cash Flow (Unaudited)


For the year ending March 31

(in thousands of dollars)
  Estimated Results
2013
Planned Results
2014
Operating Activities
Net cost of operations before government funding and transfers 152,863 147,119
Non-cash items:
Amortization of tangible capital assets (note 9 ) (1,335) (1,241)
Gain (Loss) on disposal of tangible capital assets (note 9) (8) 22
Services provided without charge by other government departments (note 11) (21,554) (20,922)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances (3,513) (92)
Increase (decrease) in prepaid expenses 25 (44)
Decrease (increase) in accounts payable and accrued liabilities 4,917 1,288
Decrease (increase) in vacation pay and compensatory leave 326 457
Decrease (increase) in future employee benefits 3,778 603
Cash used in operating activities 135,499 127,190
Capital Investing Activities:
Acquisition of tangible capital assets (note 9) 1,075 800
Proceeds from disposal of tangible capital assets (note 9) (32) (28)
Cash used in capital investing activities 1,043 772
Net cash provided by Government of Canada 136,542 127,962

Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to September 30, 2012. The information for the remainder of the fiscal year 2012-13 and for fiscal year 2013-14 are based on estimates.

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


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 professional, non-partisan advice and support to the Prime Minister, the ministers within the Prime Minister’s portfolio and Cabinet. The Privy Council Office supports the development of the Government of Canada's policy and legislative agendas; coordinates responses to issues facing the Government and the country; and supports the effective operation of Cabinet.

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 of inquiry. In 2012-13, the Privy Council Office provided support to 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 the core programs below.

1.1 Prime Minister and portfolio ministers' support and advice

This program enables the Privy Council Office to provide professional, non-partisan advice and support to the Prime Minister and portfolio ministers on the full spectrum of issues and policies they address on a daily basis. As part of this program, the Privy Council Office also provides advice and support on: Canada’s Westminster style of government; the structure and organization of government; Governor-in-Council appointments; the development and implementation of parliamentary and legislative programs; and democratic reform.

This program also provides administrative advice and support pertaining to the budget of the Prime Minister's Office and those of the offices of portfolio ministers.

1.2 Cabinet and Cabinet committees' advice and support

This program supports the efficient and effective functioning of Cabinet and Cabinet committees on a day-to-day basis. As part of this work, the Privy Council Office coordinates departmental policy, legislative and government administration proposals going to Cabinet and its committees, performs a challenge function during the policy development process and prepares briefing materials and accompanying policy analysis to facilitate Cabinet’s decisionmaking process. The Privy Council Office also provides a secretariat function for Cabinet and its committees, which includes scheduling and support services for meetings, as well as preparation and distribution of Cabinet documents. This program also supports effective policy integration across the federal government so that proposals take into account the full range of departmental perspectives and issues related to implementation. These include issues linked to, for example, communications, parliamentary affairs, intergovernmental relations and budget impacts.

1.3 Public service leadership and direction

This program supports the development and maintenance of a high-quality public service that meets the highest standards of accountability, transparency and efficiency. As part of this work, the Privy Council Office provides advice to the Clerk and the Prime Minister on Public Service renewal and business transformation in order to position the Public Service workforce and workplace for the future as more adaptable, innovative and streamlined. The Privy Council Office also supports the human resources management of senior leaders across the government, including performance management and leadership development.

1.4 Commissions of inquiry

This program provides commissions of inquiry with financial and administrative support. As part of this work, the Privy Council Office can, when necessary, provide ongoing administrative advice and support in the following areas: staffing, acquisition services, contracting, financial services, access to funding, records management, payroll support, publishing information online, translation, legal services, security and systems support.

1.5 Internal services

This program provides internal services in support of other programs and corporate obligations. Internal services include: management and oversight; legal support; human resources management; financial management; information management; information technology; real property; materiel management; acquisition; contracting; security and emergency management; access to information and privacy services; travel; and, other administrative services.

2. Methodology and significant assumptions

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

The information in the estimated results for fiscal year 2012-13 is based on actual results as at September 30, 2012 and forecasts for the remainder of the fiscal year. Estimated year end information for 2012-13 is used as the opening position for the 2013-14 planned results, and forecasts have been made for the planned results for the 2013-14 fiscal year.

The main assumptions underlying the forecasts are as follows:

  1. The Privy Council Office’s core activities will remain substantially the same as for the previous year and no commission of inquiry has been forecasted for the coming 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 September 30, 2012.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2012-13 and for 2013-14, 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 appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of significant accounting policies

The future-oriented financial statements have been prepared in accordance with the Treasury Board Accounting Standards in effect in 2012. These Government's accounting policies 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 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 Future-Oriented Statement of Operations and Departmental Net Financial Position and in 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 or to the CRF

    Amounts due from or 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 authorities to discharge its liabilities.
  4. Revenues
    • 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 that gave rise to the revenue takes place.
    • Revenues that are non-respendable are not available to discharge the Privy Council Office's liabilities. While the Clerk of the Privy Council and Secretary to the Cabinet is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the Privy Council Office's gross revenues.
  5. Expenses – Expenses are recorded on an accrual basis:
    • Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the future-oriented financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.
    • 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 and workers’ compensation are recorded 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 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. The Privy Council Office's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the future-oriented financial statements of the Government of Canada, as the Plan's sponsor.
    2. 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.
  7. Accounts receivable

    Accounts receivable are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for accounts receivable where recovery is considered uncertain.
  8. Contingent liabilities

    Contingent liabilities are potential liabilities that 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 if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the future-oriented financial statements.
  9. 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, 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

    Work in progress 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 future-oriented 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 contingent liabilities, the allowance of doubtful accounts, the liability for employee future 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 future-oriented financial statements in the year they become known.

5. Parliamentary Authorities

The Privy Council Office receives most of its funding through annual parliamentary authorities. Items recognized in the Future-Oriented Statements of Operations and Departmental Net Financial Position and Future-oriented Statements 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) Reconciliation of net cost of operations to forecast authorities used

(in thousands of dollars)
  Estimated
2013
Planned
2014
Net cost of operations before government funding and transfers 152,863 147,119
Adjustments for items affecting net cost of operations but not
affecting authorities:
Amortization of tangible capital assets (note 9) (1,335) (1,241)
Gain (loss) on disposal of tangible capital assets (note 9) (8) 22
Services provided without charge by other government departments (note 11) (21,554) (20,922)
Prepaid expenses previously charged to appropriation (973) (965)
(Increase) decrease in vacation pay and compensatory leave 326 457
(Increase) decrease in employee future benefits 3,778 603
(Increase) decrease in accrued liabilities 3,604 -
Refund of prior years’ expenditures 48 46
Other 41 39
(16,073) (21,961)
Adjustments for items not affecting net cost of operations but
affecting authorities:
Acquisition of tangible capital assets (note 9) 1,075 800
Proceeds from disposal of tangible capital assets (note 9) (32) (28)
Prepaid expenses 998 921
2,041 1,693
Forecast authorities used 138,831 126,851

b) Forecast authorities provided and used

(in thousands of dollars)
  Estimated Results
2013
Planned Results
2014
Authorities provided:
Vote-Operating expenditures 128,913 111,943
Statutory amounts 16,456 14,930
Less:
Authorities available for future years (49) (22)
Lapsed: Operating (6,489 -
Forecast authorities used 138,831 126,851

6. 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
2013
Planned Results
2014
Accounts payable - External parties 8,980 8,255
Accounts payable - Other governement departments and agencies 2,598 2,035
Total accounts payable 11,578 10,290
Other liabilities 34 34
Total accounts payable and accrued liabilitites 11,612 10,324

7. Employee future 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 Privy Council Office contribute to the cost of the Plan. The 2012-13 forecast expenses amounts to $15,215,837 ($13,772,524 in 2013-14), which represents approximately 1.8 times 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 future-oriented 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 salary at termination of employment. 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:

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)
  Estimated Results
2013
Planned Results
2014
Accrued benefits obligation - Beginning of year 10,921 7,143
Expense for the year (536) 1,565
Expected benefits payments during the year (3,242) (2,168)
Accrued benefits obligation - End of year 7,143 6,540

8. Accounts receivable and advances

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

(in thousands of dollars)
Estimated Results
2013
Planned Results
2014
Receivables - Other government departments and agencies 480 473
Receivables - External parties 164 69
Employee advances 10 10
Subtotal 654 552
Allowance for doubtful accounts on receivables from external parties (10) -
Net accounts receivable 644 552

9. Tangible Capital Assets

Tangible capital assets

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 in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)
2013 2014 2015 2016 2017
and
thereafter
Total
Transport and telecommunications 868 12 - - - 880
Information 1,237 1,217 8 - - 2,462
Professional and special services 3,555 321 89 89 - 4,054
Rental 495 348 203 101 63 1,210
Purchased repair and maintenance 375 - - - - 375
Utilities, materials and equipment 72 2 - - - 74
Acquisition of machinery and equipment 117 38 - - - 155
Transfer payment 21 - - - - 21
Total 6,740 1,938 300 190 63 9,231

11. 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 an agreement with the Security and Intelligence Review Committee related to the provision of finance and administration services which is included in revenues of the section b). 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 Privy Council Office's Future-Oriented Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)
Estimated Results
2013
Planned Results
2014
Accommodation 13,370 13,429
Employer’s contribution to the health and dental insurance plans 8,183 7,492
Worker’s compensation coverage 1 1
Total 21,554 20,922

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 are not included in the Privy Council Office's Future-Oriented Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties:

(in thousands of dollars)
Estimated Results
2013
Planned Results
2014
Revenues - Other Government departments and agencies 49 49
Expenses - Other Government departments and agencies 26,763 25,758

Expenses disclosed in (b) exclude common services provided without charges which are already disclosed in (a).

12. Segmented information

Presentation by segment is based on the Privy Council Office’s program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 4. The following table presents the forecasted expenses incurred and forecasted revenues generated for the main programs, by major object of expenses and major type of revenues. The segment results for the period are as follows:

Segmented information