ARCHIVED - Treasury Board of Canada Secretariat - 2012–13 Departmental Performance Report

• Previous Page
• Table of Contents
• Next Page

This page has been archived.

Treasury Board of Canada Secretariat
Financial Statements (Unaudited)
For the Year Ended March 31, 2013

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2013, and all information contained in these statements rests with the management of the Treasury Board of Canada Secretariat (Secretariat). These financial statements have been prepared by management using the government’s accounting policies, which are based on Canadian public sector accounting standards.

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 fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Secretariat’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the Secretariat’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 Secretariat; and through conducting an annual risk-based assessment of the effectiveness of the system of internal control over financial reporting.

A risk-based assessment for the year ended March 31, 2013, was completed in accordance with the Policy on Internal Control, and the results and action plans are summarized in the annex.

The system of internal control over financial reporting is designed to mitigate risks to a reasonable level based on an ongoing process to assess key risks, to assess effectiveness of associated key controls and to make any necessary adjustments.

The system of internal control is monitored by Internal Audit, which conducts periodic audits and reviews of different areas of the Secretariat’s operations. In addition, the Chief Audit Executive has free access to the Audit Committee, which oversees and provides advice to management on its responsibilities for maintaining adequate control systems and the quality of financial reporting. This committee undertakes a review of the financial statements, including all significant accounting estimates and judgments therein, and advises the Secretariat on any apparent material concerns.

The financial statements of the Secretariat have not been audited.

Statement of Financial Position (Unaudited)
As at March 31

	2013	2012 Restated (Note 13)
	(in thousands of dollars)
Table Notes: The accompanying notes form an integral part of these financial statements. For contractual obligations, see Note 8 For contingent liabilities, see Note 9
Liabilities
Accounts payable and accrued liabilities (Note 4)	445,510	438,134
Vacation pay and compensatory leave	7,998	8,805
Employee future benefits (Note 5)	25,131	24,377
Total liabilities	478,639	471,316
Financial assets
Due from Consolidated Revenue Fund	275,809	224,490
Accounts receivable and advances (Note 6)	171,312	206,195
Total gross financial assets	447,121	430,685
Financial assets held on behalf of government
Accounts receivable and advances (Note 6)	(347)	(4,891)
Total financial assets held on behalf of government	(347)	(4,891)
Total net financial assets	446,774	425,794
Departmental net debt	31,865	45,522
Non-financial assets
Prepaid expenses	36	81
Tangible capital assets (Note 7)	8,070	14,978
Total non-financial assets	8,106	15,059
Departmental net financial position	(23,759)	(30,463)

Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year ended March 31

	2013 Planned Results RestatedSee endnote 6* (Note 2)	2013	2012 Restated (Note 13)
	(in thousands of dollars)
Table Notes: The accompanying notes form an integral part of these financial statements. For segmented information, see Note 12 Return to endnote reference 6 * Planned results were presented in the 2012–13 future-oriented financial statements and included in the 2012–13 Report on Plans and Priorities (RPP), which are based on plans as at April 26, 2012 (see also Note 2a).
Expenses
Government-Wide Funds and Public Service Employer Payments	2,283,440	2,492,654	2,126,950
Management Frameworks	60,514	60,325	75,528
People Management	71,688	69,763	73,851
Expenditure Management	38,019	42,087	52,515
Financial Management	37,712	31,349	30,463
Internal Services	91,910	89,876	97,868
Total expenses	2,583,283	2,786,054	2,457,175
Revenues
Internal support services	6,209	6,674	8,016
Parking fees – Government-wide	6,819	4,787	7,544
Recovery of pension administration costs	8,426	4,725	5,356
Other	46	50	68
Gross revenue	21,500	16,236	20,984
Revenues earned on behalf of government	(8,456)	(5,711)	(8,574)
Total net revenues	13,044	10,525	12,410
Net cost from continuing operations	2,570,239	2,775,529	2,444,765
Transferred operations (Note 11)
Expenses	0	0	7,717
Revenue	0	0	391
Net cost of transferred operations	0	0	7,326
Net cost of operations before government funding and transfers	2,570,239	2,775,529	2,452,091
Government funding and transfers
Net cash provided by government	2,544,691	2,707,235	2,389,068
Change in due from Consolidated Revenue Fund	6,033	51,319	45,106
Services provided without charge by other government departments (Note 10)	23,779	23,658	23,801
Transfer of assets and liabilities from (to) other government departments (Note 7 and Note 11)	0	21	(5,658)
Net cost of operations after government funding and transfers	(4,264)	(6,704)	(226)
Departmental net financial position – Beginning of year	(45,010)	(30,463)	(30,689)
Departmental net financial position – End of year	(40,746)	(23,759)	(30,463)

Statement of Change in Departmental Net Debt (Unaudited)
For the year ended March 31

	2013 Planned ResultsSee endnote 7* (Note 2)	2013	2012 Restated (Note 13)
	(in thousands of dollars)
Table Notes: The accompanying notes form an integral part of these financial statements. Return to endnote reference 7 * Planned results were presented in the 2012–13 future-oriented financial statements and included in the 2012–13 Report on Plans and Priorities (RPP), which are based on plans as at April 26, 2012 (see also Note 2a).
Net cost of operations after government funding and transfers	(4,264)	(6,704)	(226)
Change due to tangible capital assets
Acquisition of tangible capital assets	95	2,411	7,952
Amortization of tangible capital assets	(1,459)	(965)	(3,265)
Proceeds from disposal of tangible capital assets	(10)	0	(23)
Loss on write-off of tangible capital assets	0	(8,375)	0
Gain on disposal of tangible capital assets	10	0	9
Transfer from (to) other government departments	0	21	(6,610)
Total change due to tangible capital assets	(1,364)	(6,908)	(1,937)
Change due to prepaid expenses	(19)	(45)	23
Net increase (decrease) in departmental net debt	(5,647)	(13,657)	(2,140)
Departmental net debt – Beginning of year	53,684	45,522	47,662
Departmental net debt – End of year	48,037	31,865	45,522

Statement of Cash Flows (Unaudited)
For the year ended March 31

	2013	2012 Restated (Note 13)
	(in thousands of dollars)
Table Notes: The accompanying notes form an integral part of these financial statements.
Operating activities
Net cost of operations before government funding and transfers	2,775,529	2,452,091
Non-cash items:
Amortization of tangible capital assets	(965)	(3,265)
Gain on disposal of tangible capital assets	0	9
Loss on write-off of tangible capital assets	(8,375)	0
Services provided without charge by other government departments (Note 10)	(23,658)	(23,801)
Variations in Statement of Financial Position:
Decrease in accounts receivable and advances	(30,339)	(150,116)
Increase (decrease) in prepaid expenses	(45)	23
Decrease (increase) in accounts payable and accrued liabilities	(7,376)	92,209
Decrease in vacation pay and compensatory leave	807	288
Decrease (increase) in future employee benefits	(754)	14,653
Transfer of liabilities to other government departments (Note 11)	0	(952)
Cash used in operating activities	2,704,824	2,381,139
Capital investing activities
Acquisitions of tangible capital assets	2,411	7,952
Proceeds from disposition of tangible capital assets	0	(23)
Cash used in capital investing activities	2,411	7,929
Net cash provided by the Government of Canada	2,707,235	2,389,068

1. Authority and Objectives

Under the broad authority of sections 5 to 13 of the Financial Administration Act, the Secretariat supports the Treasury Board as a committee of ministers in its role as the general manager and employer of the core public administration. The Secretariat is headed by a Secretary, who reports to the President of the Treasury Board.

The mission of the Secretariat is to ensure that the rigorous stewardship of public resources achieves results for Canadians.

The core business of the Secretariat is currently organized into the following key programs:

a) Government-Wide Funds and Public Service Employer Payments

The Government-Wide Funds and Public Service Employer Payments program accounts for funds that are held centrally to supplement other appropriations, from which allocations are made to, or payments and receipts are made on behalf of, other federal organizations. These funds supplement the standard appropriations process and meet certain responsibilities of the Treasury Board as the employer of the core public administration, including employer obligations under the public service pension and benefits plans.

b) Management Frameworks

In support of Treasury Board’s role as management board, the Secretariat provides the framework for the management of government operations. It does so by developing specific policies, regulations, directives and guidelines that, once approved by the Treasury Board, provide the parameters within which deputy heads manage their departments. The Secretariat also helps build understanding and capacity by reaching out to the different communities within departments and agencies (e.g., finance, human resources) that support deputy heads in implementing Treasury Board policies.

c) People Management

The People Management program supports activities of the Treasury Board in its role as the employer of the core public administration. The program’s primary objectives are to lead people management and promote leadership excellence, to support human resources infrastructure and to ensure the appropriate degree of consistency in people management across the public service. In certain instances, activities extend beyond the core public administration to separate agencies, members of the Royal Canadian Mounted Police and the Canadian Forces, students and appropriation-dependent Crown corporations.

d) Expenditure Management

The Expenditure Management program helps align resources to achieve government priorities in a way that maximizes value for money and provides a whole-of-government perspective on matters related to direct program spending. Working with all federal organizations that are subject to budget appropriation, the Secretariat undertakes the review, analysis and challenge of plans and proposals that involve departmental spending, expenditure forecasting and strategies, expenditure management of total compensation and results-based management.

e) Financial Management

The Financial Management program provides oversight and direction to federal organizations to improve the stewardship of taxpayers’ dollars and government assets.

The program works to strengthen financial management, internal audit, management of real property and materiel, investment planning, project management and procurement across the federal public service. This is accomplished by providing direction to departments; demonstrating leadership; developing and maintaining policies, guidance and practices; nurturing sustainable and professional communities (e.g., finance, procurement, audit); and helping to improve government operations.

f) Internal Services

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These include support functions such as communications, financial and human resources management, real property, information technology, legal and procurement.

Internal Services include only those activities and resources that apply across an organization and do not include those provided for a specific program.

2. Summary of Significant Accounting Policies

These financial statements have been prepared using the government’s accounting policies stated below, which 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:

a) Parliamentary authorities

The Secretariat is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Secretariat 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 Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament.

Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations and Departmental Net Financial Position and the Statement of Change in Departmental Net Debt are the amounts reported in the future-oriented financial statements included in the 2012–13 Report on Plans and Priorities. The planned results amounts have been restated to reflect the changes resulting from the implementation of the revised Treasury Board Accounting Standard 1.2 - Departmental and Agency Financial Statements and the revised methodology for calculating the amounts due from the Consolidated Revenue Fund (see also Note 13).

This restatement resulted in an increase of $8,456 thousand in net costs of operations before government funding and transfers and an increase of $368 thousand in the change in due from the Consolidated Revenue Fund. In addition, the planned results amounts have also been reclassified to conform to the current year presentation.

b) Net cash provided by government

The Secretariat operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Secretariat is deposited to the CRF, and all cash disbursements made by the Secretariat 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 government departments.

c) Amounts due from/to the Consolidated Revenue Fund (CRF)

Amounts due from or to the Consolidated Revenue Fund (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 Secretariat is entitled to draw from the CRF without further authorities to discharge its liabilities.

d) Revenues

Revenues are accounted for in the period in which the related transaction or event that gave rise to the revenues occurred.

Revenues that are non-respendable are not available to discharge the Secretariat’s liabilities. While the Secretary is expected to maintain accounting control, he or she 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 as a reduction of the entity’s gross revenues.

e) 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. 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 expenses 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 and legal services are recorded as operating expenses at their estimated cost.

f) Government-wide employee benefits

(i) Pension and other employee benefits

Eligible public service employees participate in the Public Service Pension Plan, a defined benefit pension plan sponsored by the Government of Canada. In support of the Treasury Board’s role as employer for the public service, the Secretariat funds employer contributions to the pension plan for all departments and agencies, including additional contributions in respect of any actuarial deficits, via statutory authorities.

Starting with the plan year 2012–13, and based on the March 31, 2011, triennial actuarial valuation of the public service pension plan tabled in Parliament on June 21, 2012, an annual adjustment of $435 million will be made to the Pension Fund for a period of 13 years ending in 2025. This amount, along with an annual adjustment of $8 million for Retirement Compensation Arrangement Account No. 2, comprises the $443 million that has been expensed in the Secretariat’s financial statements (refer to Note 12b).

Employer contributions to the Public Service Pension Plan are expensed in the year incurred, and the Secretariat recovers a portion of the employer contributions from other departments and agencies.

Eligible employees of the Secretariat also participate in the Public Service Pension Plan. The Secretariat’s financial reporting responsibility in respect of its own employees’ participation in the pension plan is limited to its employer contributions.

The Government of Canada also sponsors a variety of other employee benefit plans that the Secretariat is responsible for administering and/or funding through its centrally managed funds. Benefit payments for these plans are recognized as expenses in the Secretariat’s financial statements when they become due, and no accruals are recorded for future benefits. A portion of these benefits is also recovered from other departments and agencies. This accounting treatment corresponds to the funding provided to the Secretariat through parliamentary appropriations.

For all pension and other employee future benefits, the actuarial liabilities and related disclosures as well as actuarial surpluses or deficiencies for the whole of government are recognized in the financial statements of the Government of Canada. It is the government that ultimately bears actuarial and investment risks inherent to these defined benefit plans as the plans’ sponsor.

(ii) Severance benefits

Certain employee groups 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 of Canada as a whole.

As a result 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 to collect the full or remaining value of benefits on termination from the public service. As a result, the obligation related to these employee groups has ceased to accumulate.

g) Accounts receivable and advances

Accounts receivable and advances are stated at the lower of cost or net recoverable value. A valuation allowance would be recorded for receivables where recovery is considered uncertain.

h) 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 is 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.

i) Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The Secretariat 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
Computer hardware	3 years
Computer software	3 to 10 years
Machinery and equipment	3 to 10 years
Motor vehicles	3 years
Assets under construction	Once in service in accordance with asset type
Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement

Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

j) Measurement uncertainty

The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of the assets, liabilities, revenues and expenses in the financial statements. At the time of the 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 future benefits and the useful life of tangible capital assets. Actual results could significantly differ from the estimated results. 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 Authorities

The Secretariat receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position one year may be funded through the parliamentary authorities of prior, current or future years. Accordingly, the Secretariat 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 authorities used

	2013	2012 Restated (Note 13)
	(in thousands of dollars)
Net cost of operations before government funding and transfers	2,775,529	2,452,091
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(965)	(3,265)
Gain on disposal of tangible capital assets	0	9
Loss on write-off of tangible capital assets	(8,375)	0
Services provided without charge by other government departments	(23,658)	(23,801)
Decrease in vacation pay and compensatory leave	807	74
Decrease (increase) in employee future benefits	(284)	13,915
Refund of prior years' expenditures	12,698	62,742
Decrease (increase) in accrued liabilities related to workforce adjustment costs	8,095	(8,095)
Other	(5,079)	2,857
Subtotal	(16,761)	44,436
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	2,411	7,952
Proceeds from disposal of tangible capital assets	0	(23)
Increase Advances	847	52
Subtotal	3,258	7,981
Current year authorities used	2,762,026	2,504,508

b) Authorities provided and used

	2013	2012
	(in thousands of dollars)
Authorities provided
Vote 1 — Program expenditures	255,132	299,631
Vote 5 — Government contingencies	750,000	750,000
Vote 10 — Government-wide initiatives	2,093	8,511
Vote 20 — Public service insurance	2,277,220	2,380,408
Vote 25 — Operating budget carry-forward	0	8,061
Vote 30 — Pay list Requirements	26,193	361,781
Vote 33 — Capital budget carry-forward	219,656	241,899
Subtotal	3,530,294	4,050,291
Statutory authorities:
Contributions to employee benefit plans	29,698	32,071
Unallocated employer contributions made under the Public Service Superannuation Act and other retirement Acts, and the Employment Insurance Act	443,000	6,200
Payments for the pay equity settlement pursuant to section 30 of the Crown Liability and Proceedings Act	22	72
President of the Treasury Board and Minister for the Federal Economic Development Initiative for Northern Ontario – Salary and car allowance	78	78
Payments under the Public Service Pension Adjustment Act	1	2
Spending of proceeds from the disposal of surplus Crown assets	1	24
Subtotal	472,800	38,447
Less:
Lapsed or transferred authorities:
Vote 1 — Program expenditures	(23,255)	(20,141)
Vote 5 — Government contingencies	(750,000)	(750,000)
Vote 10 — Government-wide initiatives	(2,093)	(8,511)
Vote 20 — Public service insurance	(219,870)	(193,813)
Vote 25 — Operating budget carry-forward	0	(8,061)
Vote 30 — Pay list Requirements	(26,193)	(361,781)
Vote 33 — Capital budget carry-forward	(219,656)	(241,899)
Spending of proceeds from the disposal of surplus Crown assets	(1)	(24)
Subtotal	(1,241,068)	(1,584,230)
Current year authorities used	2,762,026	2,504,508

4. Accounts Payable and Accrued Liabilities

The following table presents the details of the Secretariat accounts payable and accrued liabilities:

	2013	2012
	(in thousands of dollars)
Accounts payable to other government departments and agencies	307,476	289,031
Accounts payable to external parties	13,636	11,301
Subtotal	321,112	300,332
Accrued liabilities	124,398	137,802
Total accounts payable and accrued liabilities	445,510	438,134

5. Employee Future Benefits

a) Pension benefits

The Secretariat’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 per cent per year of pensionable service times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and are indexed to inflation.

Employees and the Secretariat both contribute to the cost of the pension plan. The 2012–13 employer expense amounts to $21,205 thousand ($23,059 thousand in 2011–12) in respect of its own employees, which represents approximately 1.7 times (1.8 times in 2011–12) the contributions of employees.

For all pension and other employee future benefits, the actuarial liabilities and related disclosures as well as actuarial surpluses or deficiencies for the whole of government are recognized in the financial statements of the Government of Canada. It is the government that ultimately bears actuarial and investment risks inherent to these defined benefit plans as the plans’ sponsor.

b) Severance benefits

The Secretariat provides severance benefits to certain employee groups 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, measured as at March 31, is as follows (see also Note 2f (ii)):

	2013	2012
	(in thousands of dollars)
Accrued benefit obligation - Beginning of year	24,377	39,030
Transferred to other government departments, effective November 15, 2011 (Note 11)	0	(738)
Subtotal	24,377	38,292
Expense for the year	8,038	5,005
Benefits paid during the year	(7,284)	(18,920)
Accrued benefit obligation - End of year	25,131	24,377

6. Accounts Receivable and Advances

The following table presents details of the Secretariat accounts receivable and advance balances:

	2013	2012
	(in thousands of dollars)
Receivables - Other government departments and agencies	169,301	200,200
Receivables - External parties	1,994	5,920
Advances to employees	17	71
Deposits in transit to the Receiver General	0	4
Gross accounts receivable and advances	171,312	206,195
Accounts receivable held on behalf of government	(347)	(4,891)
Net accounts receivable and advances	170,965	201,304

The bulk of receivables from other government departments and agencies are related to receivables established at year-end as a result of employee benefit plans.

7. Tangible Capital Assets

The following table presents the details of tangible capital assets:

Capital asset class	Cost					Accumulated Amortization					Net Book Value
	Opening balance restated (Note 13)	Acquisi-tions	Adjust-ments	Disposals and write-offs	Closing balance	Opening balance restated (Note 13)	Amorti-zation	Adjust-ments	Disposals and write-offs	Closing balance	2013	2012 Restated (Note 13)
	(in thousands of dollars)
Assets under construction	3,092	1,707	(4,139)	0	660	0	0	0	0	0	660	3,092
Machinery and equipment	630	239	0	0	869	77	64	0	0	141	728	553
Motor vehicles	120	0	2	0	122	94	27	(19)	0	102	20	26
Leasehold improvements	1,952	0	0	0	1,952	1,952	0	0	0	1,952	0	0
Computer hardware	10	0	0	0	10	10	0	0	0	10	0	0
Computer software	17,276	465	4,139	(14,086)	7,794	5,969	874	0	(5,711)	1,132	6,662	11,307
Total	23,080	2,411	2	(14,086)	11,407	8,102	965	(19)	(5,711)	3,337	8,070	14,978

Adjustments made to the class “assets under construction” represent assets that were put into use during the year and that have been transferred to the class “computer software.” One vehicle was transferred in from Transport Canada with a net book value of $21,000. Another vehicle was transferred out to Public Works and Government Services Canada with a zero net book value.

There was a disposal and write-off of the Budget Office Systems Renewal (BOSR) software for a net amount of $8.3 million (historical cost of $14 million and accumulated amortization of $5.7 million). BOSR was replaced by the Expenditure Management Component (EMC) software in May of 2012.

8. Contractual Obligations

The nature of the Secretariat’s activities can result in some large multi-year contracts and obligations whereby the Secretariat will be obligated to make future payments when the services or goods are received. Significant contractual obligations that can be reasonably estimated are summarized in the following table:

	2014	2015	2016	2017	Total
	(in thousands of dollars)
Public service health and dental care plans	34,940	32,097	34,831	20,899	122,767
Other professional services	4,480	0	0	0	4,480
Management consulting	2,377	0	0	0	2,377
Computer services	3,076	0	0	0	3,076
Translation services	2,100	0	0	0	2,100
Rentals and leases	635	616	621	803	2,675
Total	47,608	32,713	35,452	21,702	137,475

Other professional services are mainly comprised of accounting and audit services, mail services and information technologies services. 

9. Contingent Liabilities

Claims and litigations

Claims have been made against the Secretariat in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. Claims for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $295 million ($65 billion in 2011–12) as at March 31, 2013. Some of these potential liabilities 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 that a reasonable estimate of the loss can be made, an estimated liability is accrued, and an expense is recorded in the financial statements. No accrual for these contingent liabilities has been made in these financial statements.

In late 1999, the major public service unions and pensioner associations launched three lawsuits against the Crown challenging the validity of the legislation granting authority to the President of the Treasury Board to debit the pension surplus from three superannuation accounts. Lower courts dismissed these lawsuits and, in December 2012, the Supreme Court of Canada dismissed the final appeal. In the 2011-12 year-end financial statements, the estimated contingent liability included an amount for these lawsuits for $65 billion. The 2012-13 contingent liability estimate does not include this amount, as the case is now closed.

In addition to the claims identified above, an action was commenced in the Federal Court of Canada on June 6, 2008, challenging the reduction of former RCMP members’ long-term disability payments under their RCMP insurance policy by the amount of their Pension Act disability benefit. This case is similar to a class action lawsuit between disabled Canadian Forces veterans and the Government of Canada. In May 2012, the Federal Court of Canada ruled that the insurance policy for Canadian Forces’ members does not permit the reduction. The parties are attempting to reach a negotiated settlement, and no accrual for this contingent liability has been made in these financial statements.

10. Related-Party Transactions

The Secretariat is related, as a result of common ownership, to all Government of Canada departments, agencies and Crown corporations. The Secretariat enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Secretariat has the responsibility to administer and fund on behalf of other government departments the employer’s contribution to the health, dental and other employee insurance plans and payroll benefits through its centrally managed funds (refer to 10b below). During the year, the Secretariat received and provided common services as disclosed in the next section.

Common services provided without charge by other government departments

During the year, the Secretariat received services without charge from certain common service organizations that were related to accommodation and legal services. These services provided without charge have been recorded in the department’s Statement of Operations and Departmental Net Financial Position as follows:

	2013	2012
	(in thousands of dollars)
Accommodation	19,905	20,294
Legal services	3,753	3,507
Total	23,658	23,801

In order to achieve efficiency and cost-effectiveness and to deliver programs economically to the public, the government has centralized some of its administrative activities. 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, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada and the email, network and data centre services provided by Shared Services Canada, are not included in the Secretariat’s Statement of Operations and Departmental Net Financial Position.

b) Common services provided without charge to other government departments

The Secretariat provided services without charge to other government departments for the provision of the employer’s contribution to health, dental and other employee insurance plans and payroll benefits in the amount of $1,741,172 thousand in 2012–13 (compared with $1,690,387 thousand in 2011–12).

c) Other transactions with related parties

	2013	2012
	(in thousands of dollars)
Expenses – Other government departments and agencies	23,263	24,808
Revenues – Other government departments and agencies	11,407	13,372

Expenses and revenues disclosed in (c) exclude common services provided without charge, which have already been disclosed in (a) and (b). The expenses are related to a variety of both goods and services and salary transactions with other departments and agencies. The revenues are mainly related to internal support services and the recovery of public service pension administration costs.

11. Transfers From (to) Other Government Departments

Effective November 15, 2011, the Secretariat transferred the control and supervision of the portion of its administration costs and functions related to email, network and data centre services to Shared Services Canada in accordance with order-in-council OIC-2011-1297, including stewardship responsibility of the assets related to these functions.

Effective October 1, 2011, the Secretariat transferred computer hardware and machinery and equipment to the Department of Finance Canada.

Effective January 1, 2012, the management of pension, insurance and social security programs for locally engaged staff was transferred from the Secretariat to Foreign Affairs and International Trade Canada ^{See endnote 8 [1]} and to National Defence. The transfer of these programs is the result of the 2008 Human Resources Agencies Horizontal Strategic Review including Public Service Employer Payments.

The impact of transfers from (to) other government departments in the financial statements is as follows:

	2013	2012
	(in thousands of dollars)
Assets
Tangible capital assets transfer (from) to other government departments
To Shared Services Canada (net book value) (Note 7)	0	6,222
To the Department of Finance Canada	0	409
From Industry Canada	0	(21)
From Transport Canada	(21)	0
Total assets transferred (from) to other government departments	(21)	6,610
Liabilities
Vacation pay and compensatory leave transferred to Shared Services Canada	0	214
Employee future benefits transferred to Shared Services Canada	0	738
Total liabilities transferred to Shared Services Canada	0	952
Adjustment to the departmental net financial position	(21)	5,658

12. Segmented Information

a) Main programs

Presentation by segment is based on the Secretariat’s program alignment architecture. This presentation is based on the same accounting policies described in the summary of significant accounting policies in Note 2. The following table presents the expenses incurred and revenues generated for the main programs, by major categories of expenses and revenues.

	GF & PSEP	MF	PM	EM	FM	IS	2013 total	2012 total Restated (Note 13)
	(in thousands of dollars)
Legend: GF & PSEP – Government-Wide Funds and Public Service Employer Payments MF – Management Framework PM – People Management EM – Expenditure Management FM – Financial Management IS – Internal Services
Transfer payment
Industry	0	65	0	0	200	0	265	452
Total transfer payment	0	65	0	0	200	0	265	452
Operating expenses
Government-wide funds and public service employer payments	2,492,654	0	0	0	0	0	2,492,654	2,126,950
Salary and employee benefits	0	44,019	47,660	28,457	22,437	58,142	200,715	229,513
Professional and special services	0	10,937	11,486	1,940	5,935	17,323	47,621	62,524
Accommodation	0	3,981	4,578	2,588	1,991	6,768	19,906	20,294
Transport and telecommunications	0	492	798	82	404	751	2,527	2,851
Machinery, equipment, parts and tools	0	221	141	56	96	3,388	3,902	4,844
Repair and maintenance	0	8	9	0	4	1,214	1,235	1,333
Utilities, materiel and supplies	0	116	275	56	70	339	856	1,280
Information	0	22	54	38	37	231	382	599
Rentals	0	346	267	38	85	1,554	2,290	945
Amortization	0	0	363	440	80	82	965	1,922
Other subsidies and expenses	0	118	4,132	8,392	10	84	12,736	3,668
Total operating expenses	2,492,654	60,260	69,763	42,087	31,149	89,876	2,785,789	2,456,723
Total expenses	2,492,654	60,325	69,763	42,087	31,349	89,876	2,786,054	2,457,175
Revenues
Internal support services	0	0	0	0	0	6,674	6,674	8,016
Parking fees and other revenues	4,832	0	877	0	0	5	5,714	7,612
Recovery of pension administration costs	0	0	3,848	0	0	0	3,848	5,356
Revenues earned on behalf of government	(4,832)	0	(877)	0	0	(2)	(5,711)	(8,574)
Total revenues	0	0	3,848	0	0	6,677	10,525	12,410
Net cost from continuing operations	2,492,654	60,325	65,915	42,087	31,349	83,199	2,775,529	2,444,765

b) Government-wide funds and public service employer payments

The Government of Canada sponsors defined benefit pension plans covering most of its employees. The Secretariat also funds payments to, or in respect of, the following:

• Employer’s share of contributions to the Public Service Death Benefit Account;
• Employer’s share of Canada/Québec Pension Plan contributions and Employment Insurance premiums;
• Employer’s share of health, disability, and life insurance premiums and related Québec sales tax;
• Employer’s share of the Québec Parental Insurance Plan premium;
• Claims and related costs under the Public Service Dental Care Plan and the Pensioners’ Dental Services Plan;
• Provincial payroll taxes in respect of employees who work in the provinces of Quebec, Ontario, Manitoba and Newfoundland and Labrador. The payroll tax is levied on employers in each province to help fund their respective health plans; and
• Returns to certain employees of their share of the Employment Insurance premium reduction.

Generally, Public Service Pension Plan contributions, Public Service Death Benefit Account contributions, Canada/Québec Pension Plan contributions and Employment Insurance premiums are recovered from all departments, agencies and revolving funds based on salaries and wages incurred. Contributions to health care plans are recovered from certain departments, agencies and all revolving funds based on a percentage of salaries and wages incurred.

The following table presents a breakdown by major category.

	2013	2012
	(in thousands of dollars)
Public Service Pension Plan and Retirement Compensation Arrangement contributions (statutory)	2,608,360	2,682,048
Public Service Health Care Plan premiums (Vote 20)	965,314	906,252
Canada/Québec Pension Plan contributions (statutory)	670,212	659,944
Provincial payroll taxes (Vote 20)	521,468	535,107
Group disability and life insurance premiums (Vote 20)	507,371	610,817
Employment Insurance premiums (statutory)	299,992	285,759
Public Service Dental Care Plan claims (Vote 20)	268,845	279,270
Pensioners' Dental Services Plan claims (Vote 20)	142,796	136,980
Pension and other government employee benefits in respect of locally engaged staff employed in Canadian missions abroad (Vote 20)	0	106
Provincial health insurance plan premiums (Vote 20)	35,187	33,576
Québec Parental Insurance Plan premiums (Vote 20)	35,801	35,484
Public Service Death Benefit Account contributions (statutory)	12,669	12,753
Public Service Pension Plan and Retirement Compensation Arrangement contributions in respect of actuarial deficits (statutory) (see also Note 2.f.(i))	443,000	6,200
Operating expenses (Vote 20)	1,013	3,375
Pension and similar payments to former government employees (Vote 20)	3,893	3,684
Employment Insurance premium reduction (Vote 20)	2,105	2,092
Miscellaneous special payments (statutory)	22	72
Total expenses	6,518,048	6,193,519
Recoveries
Employer's contributions to government employee benefit plans recovered from government departments and agencies (statutory)	3,591,233	3,640,503
Employer's contributions to government employee insurance plans recovered from government departments and agencies and other organizations (Vote 20)	184,418	184,421
Employee's contributions to the Public Service Health Care Plan recovered from government departments and other organizations (Vote 20)	176,067	171,806
Pensioners' contributions to the Pensioners' Dental Services Plan (Vote 20)	73,676	69,733
Total recoveries	4,025,394	4,066,463
Net expenses before reclassified activities	2,492,654	2,127,056
Less: reclassified activities (Note 11)	0	106
Net expenses after reclassified activities	2,492,654	2,126,950

13. Accounting Changes

1. During 2012–13, the Secretariat conducted a review of its tangible capital assets and   determined that there were tangible capital assets from prior years that had not been recorded. These tangible capital assets consisted mainly of in-house developed software and pooled purchases of furniture and desktop software. Consequently, the financial statements for the year ended March 31, 2012, have been restated. The effect of the restatement is shown in the table below; and
2. For the year ended March 31, 2011, the Secretariat adopted the revised Treasury Board Accounting Standard 1.2 – Departmental and Agency Financial Statements, which required the recording of amounts due from the Consolidated Revenue Fund as an asset on the Statement of Financial Position. In 2012–13, the Secretariat reviewed the calculation of this account and determined that certain changes to the methodology are required. The financial statements for the year ended March 31, 2012, have been restated, and the impact is shown in the table below.

	As Previously Stated 2011–12	Effect of the Adjustments		Revised Amounts 2011–12
		Note 13a)	Note 13b)
	(in thousands of dollars)
Statement of Financial Position
Due from Consolidated Revenue Fund	128,899	0	95,591	224,490
Departmental net debt	141,113	0	(95,591)	45,522
Tangible capital assets	8,745	6,233	0	14,978
Departmental net financial position	(132,287)	6,233	95,591	(30,463)
Statement of Operations and Departmental Net Financial Position
Total expenses	2,461,735	(4,560)	0	2,457,175
Net cost from continuing operations	2,449,325	(4,560)	0	2,444,765
Net cost of operations before government funding and transfers	2,456,651	(4,560)	0	2,452,091
Change in due from Consolidated Revenue Fund	84	0	45,022	45,106
Departmental net financial position – Beginning of year	(82,931)	1,673	50,569	(30,689)
Departmental net financial position – End of year	(132,287)	6,233	95,591	(30,463)
Statement of Change in Departmental Net Debt
Departmental net debt – Beginning of year	98,231	0	(50,569)	47,662
Departmental net debt –  End of year	141,113	0	(95,591)	45,522
Statement of Cash Flows
Amortization of tangible capital assets	2,983	282	0	3,265
Acquisitions of tangible capital assets	3,110	4,842	0	7,952

14. Comparative Information

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

---

Return to endnote reference 8 [1]. In July 2013, Foreign Affairs and International Trade Canada changed its name to Foreign Affairs, Trade and Development Canada.

• Previous Page
• Table of Contents
• Next Page