Future Oriented Financial Statements for 2012-2013
Statement of Management Responsibility
Office 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 January 31, 2012 and reflect the plans described in the Report on Plans and Priorities.
The future-oriented financial statements of the Office of the Communications Security Establishment Commissioner have not been audited.
Originals signed by:
Honourable Robert Décary, Q.C.
Commissioner
J. William Galbraith
Chief Financial Officer
Ottawa, Canada
Date: May 4, 2012
Future-oriented Statement of Financial Position (unaudited) as at March 31 (in dollars)
| Estimated Results 2012 | Planned Results 2013 | |
|---|---|---|
| ASSETS | ||
| Financial Assets | ||
| Due from the Consolidated Revenue Fund | $101,211 | $104,247 |
| Accounts receivable and advances (note 6) | 156,590 | 161,288 |
| Total financial assets | 257,801 | 265,535 |
| Non-financial Assets | ||
| Tangible capital assets (note 7) | 451,661 | 883,466 |
| Total non-financial assets | 451,661 | 883,466 |
| Total | $709,462 | $1,149,001 |
| LIABILITIES AND EQUITY OF CANADA | ||
| Liabilities | ||
| Accounts payable and accrued liabilities (note 8) | $72,965 | $75,154 |
| Vacation pay | 30,692 | 48,588 |
| Employee future benefits (note 9) | 83,991 | 90,290 |
| Total liabilities | 187,649 | 214,032 |
| Equity of Canada | 521,813 | 934,969 |
| Total | $709,462 | $1,149,001 |
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012.
The accompanying notes form an integral part of these financial statements.
Future-oriented Statement of Operations (unaudited) for the Year Ending March 31 (in dollars)
| Estimated Results 2012 | Planned Results 2013 | |
|---|---|---|
| Expenses | ||
| Review Program | $998,563 | $1,224,351 |
| Internal services | 515,842 | 527,743 |
| Total expenses | 1,514,405 | 1,752,094 |
| Net Cost of Operations | $1,514,405 | $1,752,094 |
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012.
Segmented information (note 12)
The accompanying notes form an integral part of these financial statements.
Future-oriented Statement of Equity of Canada (unaudited) for the Year Ending March 31 (in dollars)
| Estimated Results 2012 | Planned Results 2013 | |
|---|---|---|
| Equity of Canada, beginning of year | ($153,865) | $521,813 |
| Net cost of operations | (1,514,405) | (1,752,094) |
| Net cash provided by Government | 2,125,330 | 2,106,710 |
| Change in due to the Consolidated Revenue Fund | - | 3,036 |
| Services provided without charge by other government departments (note 11) | 64,753 | 64,753 |
| Equity of Canada, end of year | $521,813 | $944,218 |
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012.
The accompanying notes form an integral part of these financial statements.
Future-oriented Statement of Cash Flow (unaudited) for the Year Ending March 31 (in dollars)
| Estimated Results 2012 | Planned Results 2013 | |
|---|---|---|
| Operating Activities | ||
| Net cost of operations | $1,514,405 | $1,752,094 |
| Non-cash items: | ||
| Services provided without charge by other government departments (note 9) | (64,753) | (64,753) |
| Amortization of tangible capital assets | (6,676) | (94,195) |
| Variations in Statement of Financial Position | ||
| Increase (decrease) in accounts receivable and advances | 139,094 | 4,698 |
| Decrease (increase) in accounts payable and accrued liabilities | 45,516 | (2,189) |
| (Increase) in vacation pay | (326) | (17,896) |
| Decrease (increase) in employee future benefits | 93,959 | (6,299) |
| Cash used by operating activities | 1,721,219 | 1,571,460 |
| Capital investment activities | ||
| Acquisitions of tangible capital assets | 404,111 | 535,250 |
| Cash used by capital investment activities | 404,111 | 535,250 |
| Net cash provided by Government of Canada | $2,125,330 | $2,106,710 |
Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to January 31, 2012.
The accompanying notes form an integral part of these financial statements.
Notes to the Future-oriented Financial Statements (unaudited) for the year ending March 31, 2012
1. Authority and Objectives
The position of Communications Security Establishment Commissioner was created to review the activities of Communications Security Establishment Canada (CSEC) to determine whether it performs its duties and functions in accordance with the laws of Canada. This includes having due regard for the privacy of Canadians. The Commissioner's office exists to support the Commissioner in the effective discharge of his mandate.
2. Significant Assumptions
The Future-Oriented financial statements have been prepared on the basis of the government priorities and the plans of the Office as described in the Report on Plans and Priorities:
- The Office's activities have not changed from the previous year.
- Expenses, including the determination of amounts internal and external to the government are based on historical experience. With the exception of one-time expenditures for leasehold improvements the general historical pattern is expected to continue.
- Estimated year-end information for 2011-12 is used as the opening position for the 2012-13 forecasts.
These assumptions are adopted as at January 31, 2012.
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 Office has made estimates and assumptions concerning the future. These estimates and judgements 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:
- The timing and amounts of expenses for leasehold improvements as well as the acquisition and disposals of informatics hardware and equipment may affect gains/losses and amortization expense.
- The implementation of new collective agreements.
- 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 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
These future-oriented financial statements have been prepared in accordance with the 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:
(a) Parliamentary Authorities
The Office is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the departments do not parallel financial reporting according to generally accepted accounting principles since authorities are based on cash flow requirements. Consequently, items recognized 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.
(b) Net Cash Provided by Government
The Office operates within the Consolidated Revenue Fund (CRF) which is administered by the Receiver General for Canada. All cash received by the Office is deposited to the CRF and all cash disbursements made by the 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.
(c) Due from/to the Consolidated Revenue Fund
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 Office is entitled to draw from the CRF without further parliamentary expenditure authorities to discharge its liabilities.
(d) Expenses - Expenses are recorded on an accrual basis:
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 the employer's contributions to the health and dental insurance plans are reported as operating expenses at their estimated cost.
(e) Employee Future Benefits
- Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The Office's contributions to the Plan are charged to expenses in the year incurred and represent its total obligation to the Plan. Current legislation does not require the Office to make contributions for any actuarial deficiencies of the Plan.
- Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
(f) Accounts Receivable and Advances
Accounts receivable and advances are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.
(g) Tangible Capital Assets
All tangible capital assets and leasehold improvements having an initial cost of $3,000 or more are recorded at their acquisition cost. The Office does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value. Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
| Asset class | Amortization Period |
|---|---|
| Informatics hardware | 3 years |
| Other equipment | 5 years |
| Leasehold improvements | useful life of the improvement |
5. Parliamentary Authorities
The Office receives its funding through expenditure authorities provided by Parliament. Items recognized in the Future-oriented Statement of Operations and the Future-oriented Statement of Financial Position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the 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) Parliamentary Authorities
| Estimated 2012 (in dollars) | Planned 2013 (in dollars) | |
|---|---|---|
| Authorities Requested | ||
| Vote 25 - Operating expenditures | $1,973,214 | $1,970,519 |
| Statutory amounts | 98,833 | 134,077 |
| Forecast Authorities Available | $2,072,047 | $2,104,596 |
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:
|
Estimated 2012 (in dollars) |
Planned 2013 (in dollars) |
|
|---|---|---|
| Net Cost of Operations | $1,514,405 | $1,752,094 |
| Adjustments for items affecting net cost of operations but not affecting authorities | ||
| Services provided without charge | (64,753) | (64,753) |
| Amortization of tangible capital assets | (6,676) | (94,195) |
| Increase in employee future benefits | - | (6,299) |
| Increase in vacation pay | - | (17,896) |
| Other | - | 395 |
| Adjusted net cost of operations | 1,442,976 | 1,569,346 |
| Adjustments for items not affecting net cost of operations but affecting authorities | ||
| Acquisition of tangible capital assets | 404,111 | 535,250 |
| Decrease in prepaid expenses | 13,609 | - |
| Final adjusted net cost of operations | 1,860,696 | 2,104,596 |
| Forecast Current Year Lapse | 211,351 | - |
| Forecast Authorities Available | $2,072,047 | $2,104,596 |
6. Accounts Receivable and Advances
The following table presents details of accounts receivable and advances
| Estimated Results 2012 (in dollars) | Planned Results 2013 (in dollars) | |
|---|---|---|
| Receivables from other Federal Government departments and agencies | $156,290 | $160,988 |
| Petty cash advance | 300 | 300 |
| Total | $156,590 | $161,288 |
7. Tangible Capital Assets (in dollars)
| Capital Asset Class | Cost | |||
|---|---|---|---|---|
| Opening Balance | Acquisitions | Disposals and write-offs | Closing Balance | |
| Informatics hardware | $87,450 | - | - | $87,450 |
| Equipment | 75,350 | 9,250 | - | 84,600 |
| Leasehold Improvements | 300,754 | 526,000 | - | 826,754 |
| Total | $463,554 | 535,250 | - | $998,804 |
| Accumulated Amortization | ||||
|---|---|---|---|---|
| Opening Balance | Amortization | Disposals and write-offs | Closing Balance | |
| Informatics hardware | $3,500 | $17,490 | - | 20,990 |
| Equipment | 4,870 | 15,070 | - | 19,940 |
| Leasehold Improvements | 3,523 | 61,635 | 66,158 | |
| Total | $11,893 | $94,195 | - | $106,088 |
| Net Book Value | ||
|---|---|---|
| 2012 | 2013 | |
| Informatics hardware | $83,950 | $66,460 |
| Equipment | 70,480 | 55,410 |
| Leasehold Improvements | 297,231 | 761,597 |
| Total | $451,661 | $883,466 |
8. Accounts Payable and Accrued Liabilities
The following table presents details of accounts payable and accrued liabilities
| Estimated Results 2012 (in dollars) | Planned Results 2013 (in dollars) | |
|---|---|---|
| Accounts payable to other Federal Government departments and agencies | $35,000 | $36,050 |
| Accounts payable to external suppliers | 10,706 | 11,027 |
| Total accounts payable | 45,706 | $47,077 |
| Accrued liabilities | 27,259 | $28,077 |
| Total | $72,965 | $75,154 |
9. Employee Future Benefits
a) Pension Benefits
The Office's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. 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/Quebec Pension Plans benefits and they are indexed to inflation.
Both the employees and the Office contribute to the cost of the Plan. The forecast expenses are $69,381 in 2011-12 and $90,383 in 2012-13, representing proximately 1.9 times the contributions of employees.
The 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 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 at the date of these statements, is as follows.
| Estimated Results 2012 (in dollars) | Planned Results 2013 (in dollars) | |
|---|---|---|
| Accrued benefit obligation, beginning of the year | $177,950 | $83,991 |
| Expense for the year | 32,728 | 6,299 |
| Expected benefit payments during the year | (126,687) | - |
| Accrued benefit obligation, end of the year | $83,991 | $90,290 |
10. Contractual Obligations
The nature of the Office's activities can result in some large multi-year contracts and obligations whereby the Office will be obligated to make future payments when the services/goods are received. A significant contractual obligation for office accommodation that can be reasonably estimated is summarized as follows:
| Lease payments in 11-12 | $157,122 |
|---|---|
| Lease payments in 12-13 with additional floor space | $275,714 |
11. Related party transactions
The Office is related as a result of common ownership to all Government of Canada departments, agencies and Crown Corporations. The Office enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Office has agreements with Public Works and Government Services for the provision of human resource services and with National Defence for the provision of informatics services. During the year, the 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 Office received services without charge related to the employer's contribution to the health and dental insurance plans. These services without charge have been recorded in the Office's Future-oriented Statement of Operations as follows:
| Estimated Results 2012 (in dollars) | Planned Results 2013 (in dollars) | |
|---|---|---|
| Employer's contribution to the health and dental insurance plans | $64,753 | $64,753 |
The Government has structured some of its administrative activities for efficiency, cost effectiveness 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 cost of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada are not included in the Office's Future-oriented Statement of Operations.
b) Other Transactions with Related Parties
| Estimated Results 2012 (in dollars) | Planned Results 2013 (in dollars) | |
|---|---|---|
| Accounts receivable from other government departments and agencies | $156,290 | $161,288 |
| Expenses - other government departments and agencies | 330,603 | 866,521 |
| Total other transactions with related parties | $486,893 | $1,027,809 |
12. Segmented Information
Presentation by segment is based on the 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 for the main program activities, by major object of expenses. The segment results for the period are as follows:
| Operating Expenses | 2012 | 2013 | ||
|---|---|---|---|---|
| Total | Review Program | Internal Services | Total | |
| Salaries and employee benefits | $873,130 | $806,082 | $179,348 | $985,430 |
| Professional and special services | 404,809 | 204,963 | 109,880 | 314,843 |
| Accommodation | 157,122 | 183,901 | 91,813 | 275,714 |
| Amortization of tangible capital assets | 6,676 | - | 94,195 | 94,195 |
| Utilities, materials and supplies | 27,038 | - | 27,849 | 27,849 |
| Transportation and telecommunications | 24,441 | 22,992 | 1,625 | 24,617 |
| Information | 11,627 | 6,413 | 7,776 | 14,189 |
| Rentals | 9,562 | - | 10,257 | 10,257 |
| Repair and maintenance | - | - | 5,000 | 5,000 |
| Net Cost of Operations | $1,514,405 | $1,224,351 | $527,743 | $1,752,094 |
- Date modified: