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Section III – Supplementary Information

PSC Financial Statements

PUBLIC SERVICE COMMISSION

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements of the Public Service Commission (PSC) for the year ended March 31, 2010 and all information contained in these statements rests with PSC’s management.  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.

Management is responsible for the integrity and objectivity of the information in these financial statements.  Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of PSC's financial transactions.  Financial information submitted to the Public Accounts of Canada and included in the PSC's Departmental Performance Report is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the PSC; and through conducting an annual assessment of the effectiveness of the system of internal control over financial reporting. 

The system of internal control over financial reporting is designed to mitigate risk to a reasonable level and may not prevent or detect misstatements.  It is based on an ongoing process designed to identify and prioritize risks and the controls to mitigate these risks.
The effectiveness and adequacy of the department’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the department's operations, and by the Departmental Internal Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the President of the PSC.

The PSC’s financial statements have been audited by the Auditor General of Canada, the independent auditor for the Government of Canada.

 

AUDITOR’S REPORT

To the Speaker of the House of Commons and the Speaker of the Senate

I have audited the statement of financial position of the Public Service Commission as at
31 March 2010 and the statements of operations, equity of Canada and cash flow for the year then ended. These financial statements are the responsibility of the Commission’s management. My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In my opinion, these financial statements present fairly, in all material respects, the financial position of the Commission as at 31 March 2010 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Further, in my opinion, the transactions of the Commission that have come to my notice during my audit of the financial statements have, in all significant respects, been in accordance with the Financial Administration Act and regulations and the Public Service Employment Act.

Sheila Fraser, FCA
Auditor General of Canada

Ottawa, Canada
16 July 2010

Statement of Financial Position

($ in thousands of dollars)

Statement of Financial Position At March 31 (March 31, 2010)	2010	2009
Assets
Financial assets
Due from the Consolidated Revenue Fund	5,163	10,057
Accounts receivable and advances (Note 4)	953	2,155
Total - Financial assets	6,116	12,212
Non-financial assets
Prepaid expenses	601	388
Tangible capital assets (Note 5)	17,449	21,352
Total - Non-financial assets	18,050	21,740
Total Assets	24,166	33,952
Liabilities
Lease obligation for tangible capital assets (Note 6)	18
Accrued salary	1,837	6,234
Accrued vacation leave	3,847	3,630
Accounts payable and accrued liabilities (Note 7)	6,251	6,925
Employee future benefits (Note 8)	17,396	19,274
Total - Liabilities	29,349	36,063
Equity of Canada (Note 9)	(5,183)	(2,111)
Total liabilities and Equity of Canada	24,166	33,952
Contingent liabilities (Note 10)
Contractual obligations (Note 11)

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

Approved by:

Statement of Operations

($ in thousands of dollars)

Statement of Operations For the year ended March 31	2010	2009
Expenses (Note 12)
Staffing services and assessment
Staffing services	28,716	33,716
Assessment services	27,273	27,321
Total	55,989	61,037
Oversight of integrity of staffing and political neutrality
Audits, studies and evaluations	16,663	15,419
Investigations and early intervention mechanisms	4,351	4,784
Monitoring	3,428	3,401
Total	24,442	23,604
Appointment integrity and political neutrality
Policy, regulation and exclusion approval orders	6,695	6,166
Delegated appointment authorities	2,835	2,600
Non-delegated appointment authorities	2,601	2,606
Political activity	1,238	1,359
Total	13,369	12,731
Internal Services
Governance & management support	13,015	13,187
Resource management services	28,017	25,655
Asset management services	3,173	2,166
Total	44,205	41,008
Total expenses	138,005	138,380
Revenues
Assessment and counselling services and products	12,399	12,044
Activities on behalf of:
Canada School of Public Service	53	119
Less: Costs recovered	(53)	(119)
Net cost of. operations	125,606	126,336

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

Statement of Equity of Canada

($ in thousands of dollars)

Statement of Equity of Canada For the year ended March 31	2010	2009
Equity of Canada, beginning of year	(2,111)	5,438
Net cost of operations	(125,606)	(126,336)
Net cash provided by Government of Canada	108,698	98,138
Change in Due from the Consolidated Revenue Fund	(4,894)	2,593
Services received without charge from other government departments and agencies (Note 14)	18,730	18,056
Equity of Canada, end of year	(5,183)	(2,111)

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

Statement of Cash Flow

($ in thousands of dollars)

Statement of Cash Flow For the year ended March 31	2010	2009
Operating activities
Cash received from:
Assessment and counselling services and products	13,091	15,498
Cash paid for:
Salaries and employee benefits	95,980	85,860
Professional and special services	13,491	13,193
Transportation and telecommunications	2,784	2,865
Informatics, office equipment, furniture and fixtures	2,573	1,990
Repair and maintenance	1,565	1,924
Utilities, materials and supplies, and other payments	537	941
Printing and publications services	721	797
Rentals	830	777
	118,481	108,347
Cash used by operating activities	105,390	92,849
Capital investment activities
Acquisitions of tangible capital assets	3,304	5,293
Proceeds from disposal of tangible capital assets	-	(4)
Cash used by capital investment activities	3,304	5,289
Financing Activities
Decrease in lease obligations for tangible capital assets	4	-
Cash used in financing activities	4	-
Net cash provided by Government of Canada	108,698	98,138

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

Notes to the Financial Statements

For the year ended March 31, 2010

1. Authority and objectives

The Public Service Commission (PSC) is an independent agency established under the Public Service Employment Act (PSEA) and listed in schedules 1.1 and IV of the Financial Administration Act (FAA). The PSC was originally established in 1908 under the Civil Service Amendment Act.  It is dedicated to building a public service that strives for excellence by protecting merit, non-partisanship, representativeness of Canadian society and the use of both official languages. This responsibility is performed in the best interests of the public service as part of Canada’s governance system, by administering and applying the provisions of the PSEA and by carrying out responsibilities as provided for in the Employment Equity Act and the Official Languages Act.  The current PSEA came into force in December 2005.  This legislation emphasizes the PSC’s accountability to Parliament and delegates staffing authority to deputy heads who in turn are accountable to the PSC for exercising this power.  The Commission also carries out audits and investigations and administers measures under the PSEA regarding political activities of public servants.

The PSC, from its offices in Ottawa and its seven regional offices, offers recruitment services that allow talented Canadians, drawn from across the country, to join the public service and continually renews staffing services to meet the needs of a modern and innovative public service.  The PSC has three program activities that contribute to the achievement of its objectives:

The Appointment Integrity and Political Neutrality activity develops and maintains a policy and regulatory framework for safeguarding the integrity of public service staffing and ensuring political neutrality. This activity includes establishing policies and standards, providing advice, interpretation and guidance and administering delegated and non-delegated appointment authorities.

The Oversight of Integrity of Staffing and Political Neutrality activity provides an accountability regime for the implementation of the appointment policy and regulatory framework for safeguarding the integrity of public service staffing and ensuring political neutrality. This activity includes monitoring departments’ and agencies’ compliance with legislative requirements, conducting audits, studies and evaluations, carrying out investigations, and reporting to Parliament on the integrity of public service staffing.

The Staffing Services and Assessment activity develops and maintains systems that link Canadians and public servants seeking employment opportunities in the federal public service with hiring departments and agencies. It provides assessment-related products and services in the form of research and development, consultation, assessment operations and counselling for use in recruitment, selection and development throughout the federal public service.  A portion of these assessment-related and counselling services are provided on a cost recovery basis.  This activity also includes delivering staffing services, programs and products to departments and agencies, to Canadians and public servants, through client service units located across Canada.

2. Summary of significant accounting policies

1. Basis of presentation
   These financial statements have been prepared in accordance with the Treasury Board
   accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector.
2. Parliamentary appropriations
   The PSC is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the PSC do not parallel financial reporting according to Canadian generally accepted accounting principles for the public sector since appropriations are primarily based 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 3 provides a high-level reconciliation between the basis of reporting.
3. Due from the Consolidated Revenue Fund
   The PSC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada.  All cash received by the PSC is deposited to the CRF and all cash disbursements made by the PSC are paid from the CRF. Due from the CRF represents amounts of cash that the PSC is entitled to draw from the CRF, without further appropriations, in order to discharge its liabilities.
4. Accounts receivable
   Accounts receivable are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
5. Tangible capital assets
   All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded as capital assets at their acquisition cost. Similar items under $5,000 are expensed in the Statement of Operations.  The PSC does not capitalize intangibles.  The cost of assets under development by the PSC includes material, direct labour and related overhead.  Amounts included in assets under development are transferred to the appropriate class of asset upon completion, and are then amortized.  Amortization of tangible capital assets is done on a straight-line basis.

   Asset class	Amortization period
   Office equipment	3 and 10 years
   Informatics hardware and infrastructure	4 and 5 years
   Computer software	3 years
   In-house developed software	Lesser of 12 years or useful life
   Furniture and fixtures	15 years
   Vehicles	6 years
   Leasehold improvements	Lesser of 10 years or term of lease
   Leased tangible capital assets	Lesser of term of lease/useful life

6. Salaries and benefits, and vacation leave
   Salaries and vacation leave are expensed as the salary and leave accrue to employees under their respective terms of employment. The employee’s accrued 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 March 31st for all unused vacation leave benefits accruing to employees. Employee vacation pay liabilities payable on cessation of employment represent obligations of the PSC that are normally funded through future years’ appropriations.
7. Employee future benefits
   1. Pension benefits
      The PSC’s eligible employees participate in the Public Service Pension Plan administered by the Government of Canada. The PSC’s contributions to the Plan are charged to expenses in the year incurred and represent the total pension obligation of the PSC.  The PSC is not required under current legislation to make contributions with respect to 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.
   3. Other benefits
      The Government of Canada sponsors a variety of other benefit plans, which cover the employees of the PSC.  These include health care, dental and insurance plans for which no costs are charged to the PSC.  In these cases, an estimated cost is recorded as an operating expense under the item “Services provided without charge”. The Government of Canada also sponsors workers’ compensation benefits available across Canada.  The PSC is charged for its share of the annual benefit payments incurred under this Plan.  These amounts represent the PSC’s contribution to the Plan and they are recorded by the PSC as an expense in the period incurred.  As a participant, the PSC has no other obligation to any of these plans in addition to its annual contributions.
8. Revenues
   Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenues takes place.
9. Services provided without charge
   Services provided without charge from other federal government departments and agencies are recorded as operating expenses at their estimated cost. A corresponding amount is reported directly in the Statement of Equity of Canada.
10. Measurement uncertainty
    The preparation of these financial statements in accordance with Treasury Board accounting policies requires management to make estimates and assumptions that affect amounts of assets, liabilities, revenues and expenses reported in the 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 liability for employee severance benefits and the estimated 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 financial statements in the year they become known.

3. Parliamentary appropriations

The PSC receives most of its funding through annual Parliamentary appropriations.  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 PSC 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)

	2010	2009
Net cost of operations	125,606	126,336
Adjustments for items affecting net cost of operations but not affecting appropriations:
Services received without charge	(18,730)	(18,056)
Amortization of tangible capital assets	(7,178)	(6,203)
Revenue not available for spending	1,671	1,471
Decrease in Employee future benefits	1,878	(3,182)
Increase in Vacation leave	(217)	94
Other	217	507
Total	103,247	100,967
Adjustments for items not affecting net cost of operations but affecting appropriations:
Acquisitions of tangible capital assets	3,304	5,293
Decrease in lease obligations for tangible capital assets	4	-
Prepaid expenses	213	25
Total	3,521	5,318
Current year appropriations used	106,768	106,285

(b) Appropriations provided and used:

($ in thousands of dollars)

	2010	2009
Parliamentary appropriations provided:
Voted - Operating expenditures	98,833	99,103
Statutory contributions to employee benefit plans	13,958	12,680
Spending of proceeds from disposal of surplus assets	1	4
Refund of previous year revenue	126	19
Total	112,918	111,806
Less: Lapsed appropriations - operating expenditures	(6,150)	(5,521)
Current year appropriations used	106,768	106,285

4. Accounts receivable and advances

($ in thousands of dollars)

	2010	2009
Receivables - Federal Government departments, agencies and Crown corporations	910	2,146
Receivables - External parties	37	3
Advances to PSC's Employees	6	6
Total	953	2,155

5. Tangible capital assets

($ in thousands of dollars)

	Cost					2010	2009
	March 31, 2009	Acquisitions	Disposals, write-offs	Transfers	March 31, 2010	Net book value	Net book value
Office equipment	649	56	6	-	699	298	290
Informatics hardware and infrastructure	9,103	507	594	-	9,016	2,571	3,231
Software	23,450	779	4	5,741	29,966	11,595	10,851
Furniture and fixtures	1,470	-	5	-	1,465	1,129	1,204
Vehicles	30	-	-	-	30	24	27
Leasehold improvements	1,077	80	-	-	1,157	757	785
Assets under development	4,964	1,882	50	(5,741)	1,055	1,055	4,964
Sub-Total	40,743	3,304	659	-	43,388	17,429	21,352
Leased equipment	-	22	-	-	22	20	-
Total	40,743	3,326	659	-	43,410	17,449	21,352

($ in thousands of dollars)

	2010 Accumulated amortization
	March 31, 2009	Amortization	Disposals, write-offs	March 31, 2010
Office equipment	359	46	4	401
Informatics hardware and infrastructure	5,872	1,167	594	6,445
Software	12,599	5,776	4	18,371
Furniture and fixtures	266	76	6	336
Vehicles	3	3	-	6
Leasehold improvements	292	108	-	400
Sub-Total	19,391	7,176	608	25,959
Leased equipment	-	2	-	2
Total	19,391	7,178	608	25,961

Amortization expense for the year ended March 31, 2010 is $7,178,000 ($6,203,000 in
2008-2009).

6. Lease obligation for Tangible capital assets

The department has entered into agreements for photocopier rentals under capital lease with a cost of $22,000 and accumulated amortization of $2,000 as at March 31, 2010.  The obligations for the upcoming years include the following:

($ in thousands of dollars)

	2010	2009
2011	4	-
2012	5	-
2013	5	-
2014 and thereafter	5	-
Total future minimum lease payment	19	-
Imputed interest (0.68% to 2.28%)	1	-
Balance of obligations under leased tangible capital assets	18	-

7. Accounts payable and accrued liabilities

($ in thousands of dollars)

	2010	2009
Payables - Federal Government departments, agencies and Crown corporations	3,057	1,832
Payables - External parties	3,194	5,093
Total	6,251	6,925

8. Employee future benefits

(a) Pension benefits

The PSC eligible 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 the Canada and Quebec Pension Plan benefits and they are indexed to inflation.

Both the employees and the PSC contribute to the cost of the Plan.  The 2009-2010 expense amounts to $10,077,000 ($9,493,000 in 2008-2009), which represents approximately 1.9 times the employees’ contributions.
 
The PSC'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 PSC 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)

	2010	2009
Accrued benefit obligation, beginning of year	19,274	16,092
Expense for the year	140	5,087
Benefits paid during the year	(2,018)	(1,905)
Accrued benefit obligation, end of year	17,396	19,274

9. Equity of Canada

The deficit represents liabilities incurred by the PSC, net of assets, that have not yet been funded through appropriations.  Significant components of this amount are employee future benefits and vacation pay liabilities.  These amounts are expected to be funded by appropriations in future years as they are paid.

10. Contingent liabilities

Claims are made against the PSC in the normal course of operations.  There are currently claims outstanding at March 31, 2010, none of which are expected to result in payment. ($0 at March 31, 2009)

11. Contractual obligations

The nature of the PSC's activities can result in some large multi-year obligations whereby the PSC will be obligated to make future payments when the services are received.  Significant contractual obligations other than lease obligation for tangible capital assets that can be reasonably estimated are summarized as follows:

($ in thousands of dollars)

	2011	2012	2013	2014 and thereafter	Total
Service contracts	1,212	9	-	-	1,221
Operating leases	163	60	26	18	267
Total	1,375	69	26	18	1,488

12. Expenses by major classification

($ in thousands of dollars)

	Staffing services and assessment	Oversight of integrity of staffing and political neutrality	Appointment integrity and political neutrality	Internal Services	2010 Total	2009 Total
Salaries and employee benefits	39,209	20,099	11,521	27,233	98,062	99,273
Professional and special services	4,720	1,820	508	6,508	13,556	14,567
Accommodation	4,278	1,868	1,022	3,378	10,546	10,409
Amortization of tangible capital assets	4,686	176	36	2,280	7,178	6,203
Transportation and telecommunications	1,375	364	161	829	2,729	2,740
Repair and maintenance	477	1	3	1,556	2,037	1,668
Informatics, office equipment, furniture and fixtures	265	45	5	1,383	1,698	1,308
Utilities, materials and supplies, and other	332	30	55	434	851	774
Rentals	400	21	25	379	825	730
Printing and publications services	247	18	33	225	523	708
Total	55,989	24,442	13,369	44,205	138,005	138,380

13. Related party transactions

The PSC is related in terms of common ownership to all Government of Canada departments, agencies and Crown corporations. The PSC enters into transactions with these entities in the normal course of business and on normal trade terms.

During 2009-2010, the PSC incurred expenses of $39,274,000 ($35,772,000 in 2008-2009) and earned revenues of $12,385,000 ($12,037,000 in 2008-2009) from transactions in the normal course of business with other federal government departments, agencies and Crown corporations.  These expenses include services received without charge as described in
Note 14.

14. Services provided without charge

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

($ in thousands of dollars)

	2010	2009
Public Works and Government Services Canada - accommodation	10,547	10,409
Treasury Board Secretariat - employer's share of insurance premiums	6,904	6,401
Justice Canada - legal services	1,039	997
Human Resources and Social Development Canada - employer's portion of Worker's compensation payments	133	137
Office of the Auditor General of Canada - audit services	107	112
Total	18,730	18,056

15. Change in estimate

During fiscal year 2009-2010, management revised the estimate on the expected useful life of its Public Service Recruitment System (PSRS), an in-house developed software.  The estimated useful life for PSRS was revised to March 31, 2016 (originally March 31, 2011) given Management’s intention to continue using and maintaining the system for the foreseeable future.  This change came as a result of new information available this year and is applied prospectively. The depreciation expense is therefore $1,305,000 lower than it would have been under the previous useful life and net book value would be higher by the same amount as at November 30, 2009.

16. Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.

List of Supplementary Information Tables

Supplementary information on the following tables can be found on the Treasury Board of Canada Secretariat’s Web site at http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp.

• Source of Respendable and Non-respendable Revenues
• User Fees Reporting
• Status Report on Projects Operating with Specific Treasury Board Approval
• Green Procurement
• Response to Parliamentary Committees, to the Auditor General and to the Public Service Commission on External Audits
• Internal Audits and Evaluations

Other Items of Interest

Supplementary information on the following subjects can be found in the publications section of the PSC’s Web site at http://www.psc-cfp.gc.ca.

• Information by sub-activities
• Assessment of Internal Control over Financial Reporting for the fiscal year ended March 31, 2010

This document is available on the Treasury Board of Secretariat’s Web site at http://www.tbs-sct.gc.ca and on the publications section of the PSC’s Web site at http://www.psc-cfp.gc.ca.

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Footnotes

www.psc-cfp.gc.ca/abt-aps/rprt/ovr-srv/index-eng.htm [Return]

The Public Service Commission Action Plan to Respond to the Recommendations of the Public Service Commission’s Independent Oversight Review Committee www.psc-cfp.gc.ca/spch-disc/2009/2009-05-12-1a-eng.htm [Return]

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