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Appendices

Appendix A: Financial Statements

OFFICE OF THE CHIEF ELECTORAL OFFICER
For the year ended March 31, 2007

Management Responsibility for Financial Statements

Responsibility for the integrity and objectivity of the accompanying Financial Statements for the year ended March 31, 2007 and all information contained in these statements rests with the management of the Office of the Chief Electoral Officer.

These Financial Statements have been prepared by management in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector and year-end instructions issued by the Office of the Comptroller General. Some of the information in the Financial Statements is based on management's best estimates and judgements and gives due consideration to materiality. These statements should be read within the context of the significant accounting policies set out in the Notes.

Management maintains a system of financial management and internal controls designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded, resources are managed economically and efficiently in the attainment of corporate objectives, and that transactions are in accordance with the Financial Administration Act and regulations, the Canada Elections Act, the Referendum Act, the Electoral Boundaries Readjustment Act and the Constitution Acts. Management is also supported and assisted by a program of internal audit services.

The Auditor General of Canada, the independent auditor for the Government of Canada, has audited the transactions and the Financial Statements and issued the attached auditor's report.

Marc Mayrand Chief Electoral Officer of Canada	Janice Vézina Executive Director, Political Financing and Corporate Services

Ottawa, Canada
July 13, 2007

OFFICE OF THE CHIEF ELECTORAL OFFICER
Statement of Financial Position

At March 31

(in thousands of dollars)
	2007	2006 (Restated – Note 3)
ASSETS
Financial assets
Accountable advances	$ 6	$ 8
Due from the Consolidated Revenue Fund	23,592	66,027
Receivables
- from external parties	897	1,059
- from government departments and agencies	767	863
Total financial assets	25,262	67,957
Non-financial assets
Prepaid expenses	907	478
Consumable supplies	8,733	5,575
Tangible capital assets (Note 5)	16,062	13,859
Total non-financial assets	25,702	19,912
Total	$50,964	$87,869
LIABILITIES
Accounts payable and accrued liabilities
- to external parties	$20,024	$58,782
- to government departments and agencies	2,059	3,843
Accrued employee salaries and benefits	2,206	2,601
Lease obligation for tangible capital asset (Note 6)	249	152
Provision for vacation leave	1,294	1,305
Deposits from political candidates	71	1,666
Employee severance benefits (Note 7)	3,655	3,352
Provision for contingent liabilities	56	80
Total liabilities	29,614	71,781
EQUITY OF CANADA	21,350	16,088
Total	$50,964	$87,869

Contractual Obligations (Note 8)

The accompanying notes form an integral part of these Financial Statements.

Approved by:

Marc Mayrand Chief Electoral Officer of Canada	Janice Vézina Executive Director, Political Financing and Corporate Services

OFFICE OF THE CHIEF ELECTORAL OFFICER
Statement of Operations

For the Year Ended March 31

(in thousands of dollars)
	2007	2006
Expenses (Note 9)
Salaries and benefits	$37,253	$127,914
Political parties quarterly allowance	27,452	24,536
Professional services	23,079	29,820
Rental of equipment and accommodation	7,202	23,771
Advertising, publishing and printing	6,225	25,377
Travel and communication	6,013	26,702
Amortization of tangible capital assets	4,532	4,498
Repair and maintenance of equipment	2,072	2,431
Small equipment	1,661	1,435
Utilities, materials and supplies	1,106	1,816
Interest and other charges	6	38
Reimbursement (adjustments) of candidates’ and parties’ expenses	(868)	54,681
Total Expenses	115,733	323,019
Non-tax revenue	(69)	(48)
Net Cost of Operations	$115,664	$322,971

The accompanying notes form an integral part of these Financial Statements.

OFFICE OF THE CHIEF ELECTORAL OFFICER
Statement of Equity of Canada

For the Year Ended March 31

(in thousands of dollars)
	2007	2006 (Restated – Note 3)
Equity of Canada, beginning of year, as previously stated	$9,805	$19,666
Change in accounting policy	-	(96)
Adjustment of Prior Year Financial Statements (Note 3)	6,283	-
Equity of Canada, beginning of year, restated	16,088	19,570
Net cost of operations	(115,664)	(322,971)
Change in Due from the Consolidated Revenue Fund	(42,435)	36,470
Net cash provided by Government	157,529	277,547
Services provided without charge (Note 10)	5,832	5,472
Equity of Canada, end of year	$21,350	$16,088

The accompanying notes form an integral part of these Financial Statements.

OFFICE OF THE CHIEF ELECTORAL OFFICER
Statement of Cash Flow

For the Year Ended March 31

(in thousands of dollars)
	2007	2006 (Restated – Note 3)
OPERATING ACTIVITIES
Net cost of operations	$115,664	$322,971
Non-Cash items:
Amortization of tangible capital assets	(4,532)	(4,498)
Services provided without charge	(5,832)	(5,472)
Variation in Statement of Financial Position:
(Decrease) increase in accounts receivable and advances	(260)	587
Increase in prepaid expenses	429	99
Increase (decrease) in consumable supplies	3,158	(1,099)
Decrease (increase) in liabilities	42,264	(37,289)
Cash used by operating activities	150,891	275,299
CAPITAL INVESTMENT ACTIVITIES
Acquisition of tangible capital assets (excluding capital leases)	6,589	2,218
Payment of capital lease obligations	49	30
Cash used by capital investment activities	6,638	2,248
NET CASH PROVIDED BY GOVERNMENT OF CANADA	$157,529	$277,547

The accompanying notes form an integral part of these Financial Statements.

OFFICE OF THE CHIEF ELECTORAL OFFICER
Notes to Financial Statements

For the year ended March 31, 2007

1. Authority and Objectives

The Office of the Chief Electoral Officer (the Office), commonly known as Elections Canada, is headed by the Chief Electoral Officer who is appointed by resolution of the House of Commons and reports directly to Parliament.  The Chief Electoral Officer is completely independent of the federal government and political parties. The Office is named in Schedule I.1 of the Financial Administration Act.

The Office’s objectives are to enable the Canadian electorate to elect members to the House of Commons in accordance with the Canada Elections Act; to ensure compliance with and enforcement of all provisions of the Canada Elections Act; to calculate the number of members of the House of Commons to be assigned to each province pursuant to the Electoral Boundaries Readjustment Act and in accordance with the provisions of the Constitution Acts; and to provide the necessary technical, administrative and financial support to the ten electoral boundaries commissions, one for each province, in accordance with the Electoral Boundaries Readjustment Act.

The Office is funded by an annual appropriation (which provides for the salaries of permanent, full-time staff) and the statutory authority contained in the Canada Elections Act, the Referendum Act and the Electoral Boundaries Readjustment Act. The statutory authority provides for all other expenditures, including the costs of electoral events, maintenance of the National Register of Electors, quarterly allowances to eligible political parties, redistribution of electoral boundaries and continuing public education programs.

2. Summary of Significant Accounting Policies

1. Basis of presentation – These Financial Statements have been prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, and year-end instructions issued by the Office of the Comptroller General.

2. Parliamentary appropriations – The Office operates under two funding authorities: an annual appropriation and the statutory authority. Appropriations provided to the Office do not parallel financial reporting according to Canadian generally accepted accounting principles for the public sector.  They are based in a large part on cash flow requirements.  Consequently, items recognized in the Statement of Operations and the Statement of Financial Position are not necessarily the same as those provided through appropriations from Parliament.
   
   Note 4 to these Financial Statements provides information regarding the source and disposition of these authorities and provides a high-level reconciliation between the two bases of reporting. 

3. Due from the Consolidated Revenue Fund – 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.  Due from the CRF represents the amount of cash that the Office is entitled to draw from the Consolidated Revenue Fund without further appropriations in order to discharge its liabilities.
   
   Net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

4. Receivables – Receivables are stated at amounts expected to be ultimately realized. A provision is made for receivables where recovery is considered uncertain.

5. Consumable supplies – Consumable supplies consist mainly of forms and publications used to administer election events and documents distributed to political entities. These supplies are recorded at weighted average cost. The cost is charged to operations in the period in which the items are consumed.  If they no longer have service potential, they are valued at the lower of cost or net realizable value.

6. Tangible capital assets – Tangible capital assets are recorded at historical cost less accumulated amortization.  The Office records as tangible capital assets all expenses providing multi-year benefits and leasehold improvements having an initial cost of $5,000 or more.  Similar items less than $5,000 are expensed in the Statement of Operations under small equipment. Capital assets acquired for software under development are amortized once that software is put into production.

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

   
   

   Asset Class	Useful Life
   Office equipment	3 to 10 years
   Informatics equipment	3 years
   Software	3 to 5 years
   Furniture and fixtures	10 years
   Vehicles	5 years
   Motorized equipment	10 years
   Leasehold improvements and capital leases	Term of lease

   
   

7. Salaries and benefits, and vacation leave – Salaries and benefits, and vacation leave are expensed as the salary or benefits accrue to the employees under their respective terms of employment. The employee salaries and benefits liability is calculated based on the respective terms of employment using the employees’ salary levels at year end, and the number of days remaining unpaid at the end of the year.  The liability for vacation leave is calculated at the salary levels in effect at the end of the year for all unused vacation leave benefits accruing to employees.

8. Employee future benefits
   1. 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 the total Office’s obligation to the Plan.   Current legislation does not require the 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 related 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.

9. 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 Financial Statements.

10. Services provided without charge – Services provided without charge by other government departments for accommodation, the employer’s contribution to the health and dental insurance plans, audit services and legal services are recorded as operating expenses, at their estimated cost, in the Statement of Operations.  A corresponding amount is reported directly in the Statement of Equity of Canada.

11. Political parties quarterly allowance – The Canada Elections Act allows for the payment from public funds of quarterly allowances to qualifying registered parties. The quarterly allowance is calculated based on the results of the most recent general election preceding the quarter. This allowance is expensed in each quarter of the calendar year as directed by the Act.

12. Measurement uncertainty – The preparation of Financial Statements in accordance with Canadian generally accepted accounting principles for the public sector and year-end instructions issued by the Office of the Comptroller General requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Financial Statements and the reported amounts of income and cost of operations during the reporting year.

    At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable.  The most significant estimates used are contingent liabilities, the liability for employee severance benefits, consumable supplies, the useful life of tangible capital assets and candidate and party reimbursement of eligible election expenses.  Actual results could significantly differ from those estimated.  Management’s estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the Financial Statements in the year they become known.

3. Adjustment of Prior Year Financial Statements

The Office has restated its Financial Statements for the year ended March 31, 2006, in order to correct an error in the Due from the Consolidated Revenue Fund and the Receivables from government departments and agencies.  The 2006 balance of these accounts was reduced by an incorrect amount for the GST Refundable Advance Account. Consequently adjustments were made to correct this error.

As a result, the Due from the Consolidated Revenue Fund has increased by $5,556,333, the Receivables from government departments and agencies have increased by $726,965 and the Equity of Canada has increased by $6,283,028 on the Statement of Financial Position. The Net cash provided by Government on the Statement of Equity of Canada and on the Statement of Cash Flow has increased by $726,965. The Change in the Due from the Consolidated Revenue Fund on the Statement of Equity of Canada has increased by $5,556,333.

This correction does not impact the current year.

4. Parliamentary Appropriations

The Office receives its funding through an annual Parliamentary appropriation and the statutory authority contained in the electoral legislation.  Items recognized in the Statement of Operations and the 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) Reconciliation of net cost of operations to current year appropriations used

(in thousands of dollars)
	2007	2006
Net cost of operations	$115,664	$322,971
Adjustments for items affecting net cost of operations but not affecting appropriations
Add (Less):
Amortization of tangible capital assets	(4,532)	(4,498)
Prepaid expenses	(1,315)	(1,278)
Consumable supplies	3,158	(1,099)
Services provided without charge	(5,832)	(5,472)
Change in employee severance benefits obligation	(303)	(366)
Change in provision for vacation leave	11	(49)
Other	42	(33)
	106,893	310,176
Adjustments for items not affecting net cost of operations but affecting appropriations
Add (Less):
Acquisition of tangible capital assets (excluding capital leases)	6,589	2,218
Payment of capital lease obligations	49	30
Prepaid expenses	1,744	1,377
Other	(59)	6
Current year appropriations used	$115,216	$313,807

(b) Reconciliation of Parliamentary appropriations voted to current year appropriations used

(in thousands of dollars)
	2007	2006
Appropriations Provided:
Program expenditures (Vote 25)	$22,026	$20,231
Statutory contributions to employee benefit plans	4,079	5,172
Other statutory expenditures	92,568	290,520
	118,673	315,923
Less:
Lapsed appropriation – Program expenditures (Vote 25)	(3,457)	(2,116)
Current year appropriations used	$115,216	$313,807

(c) Reconciliation of net cash provided by Government to current year appropriations used

(in thousands of dollars)
	2007	2006 (Restated – Note 3)
Net cash provided by Government	$157,529	$277,547
Variation in accounts receivables and advances	260	(587)
Variation in accounts payables and accrued liabilities	(40,542)	33,892
Variation in deposits from political candidates	(1,595)	1,554
Variation in accrued employee salaries and benefits	(395)	1,423
Other adjustments	(110)	(70)
Non-tax revenue	69	48
Current year appropriations used	$115,216	$313,807

5. Tangible Capital Assets

(in thousands of dollars)
2007					2006
	Cost
	Opening balance	Net additions (disposals) for the year	Accumulated amortization	Net book value	Net book value
Office equipment (including capital leases)	$942	$136	$(401)	$677	$596
Informatics equipment	7,452	273	(6,991)	734	1,062
Software	16,008	811	(8,982)	7,837	10,349
Software under development	746	4,212	-	4,958	746
Furniture and fixtures	1,403	-	(749)	654	775
Vehicles and motorized equipment	175	4	(86)	93	40
Leasehold Improvements	1,597	1,179	(1,667)	1,109	291
	$28,323	$6,615	$(18,876)	$16,062	$13,859

Amortization expense for the year ended March 31, 2007 is $4,532 ($4,498 in 2006).

6. Lease Obligation for Tangible Capital Assets

The Office has entered into agreements to rent office equipment under capital lease with a cost of $385,322 and accumulated amortization of $141,126 as at March 31, 2007 ($301,800 and $153,765 respectively as at March 31, 2006). The obligations for the upcoming years include the following:

(in thousands of dollars)
Maturing year	2007
2008	$ 67
2009	65
2010	65
2011	56
2012 and thereafter	18
Total future minimum lease payments	271
Less: imputed interest (4.02% to 4.43%)	(22)
Balance of Lease Obligations for Tangible Capital Assets	$249

7. Employee Future Benefits

(a) Pension benefits

The Office’s employees contribute to 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/Québec Pension Plans benefits and they are indexed to inflation. 

The Office’s and employees’ contributions to the Public Service Pension Plan for the year were as follows:

(in thousands of dollars)
	2007	2006
Office’s contributions	$3,219	$3,827
Employees’ contributions	$1,202	$1,129

The 2006-07 expense amount represents approximately 2.7 times the contributions by 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) Employee 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 appropriations. Information about the severance benefits, measured as at March 31 is as follows:               

(in thousands of dollars)
	2007	2006
Accrued benefit obligation, beginning of year	$3,352	$2,986
Expense for the year	606	518
Benefits paid during the year	(303)	(152)
Accrued benefit obligation, end of year	$3,655	$3,352

8. 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 will be rendered or goods received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)
2008	$21,680
2009	4,706
2010	2,710
2011	647
2012 and thereafter	150
Total	$29,893

9. Significant Event

A general election was held in 2005-06 and 2 by-elections in 2006-07.   The resulting variance in the cost of operations is due to the 39th general election held on January 23, 2006. 

(in thousands of dollars)
	2007		2006
Expenses	Electoral Event Delivery1	Other2	Electoral Event Delivery1	Other2
Salaries and benefits	$2,598	$34,655	$95,370	$32,544
Political parties quarterly allowance	-	27,452	-	24,536
Professional services	5,752	17,327	15,011	14,809
Rental of equipment and accommodation	66	7,136	18,512	5,259
Advertising, publishing and printing	1,964	4,261	20,929	4,448
Travel and communication	629	5,384	23,277	3,425
Amortization of tangible capital assets	-	4,532	-	4,498
Repair and maintenance of equipment	3	2,069	259	2,172
Small equipment	15	1,646	692	743
Utilities, materials and supplies	21	1,085	1,136	680
Interest and other charges	-	6	23	15
Reimbursement (adjustment) of candidates’ and parties’ expenses	(868)	-	54,681	-
Total Expenses	$10,180	$105,553	$229,890	$93,129

1	Expenses incurred for general elections, by-elections and redistribution of electoral boundaries.
2	Salary of permanent staff, other statutory expenses incurred under the Canada Elections Act, including expenses related to election readiness activities, quarterly allowances to political parties and ongoing expenses.

10. Related Party Transactions

The Office is related in terms 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.  During the year, the Office expensed $15,131,365 from transactions in the normal course of business with other government departments and agencies.  These expenses include services provided without charge from other government departments worth $5,832,349 as presented in part (a).

(a) Services provided without charge:

During the year, the Office received services that were obtained without charge from other government departments and agencies. These services without charge have been recognized in the Office’s Statement of Operations as follows:

(in thousands of dollars)
	2007	2006
Public Works and Government Services Canada - accommodation	$4,158	$3,830
Treasury Board Secretariat - employer’s share of insurance premiums	1,524	1,467
Office of the Auditor General of Canada - audit services	145	169
Human Resources and Social Development Canada - employer’s portion of Worker’s compensation payments	5	4
Justice Canada - legal services	-	2
Total Services provided without charge	$5,832	$5,472

11. Comparative information

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

Appendix B: Contacts for Further Information

Address:		Elections Canada 257 Slater Street Ottawa, Ontario K1A 0M6
Telephone:		1-800-463-6868 toll-free in Canada and the United States 001-800-514-6868 toll-free in Mexico 613-993-2975 from anywhere in the world For people who are deaf or hard of hearing: TTY 1-800-361-8935 toll-free in Canada and the United States
Fax:		613-954-8584
Web site:		www.elections.ca
Media information
Telephone:		1-877-877-9515 613-993-2224 TTY 1-800-361-8935
Fax:		613-954-8584

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