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Table 13: Future Oriented Financial Statements

Future-Oriented Financial Statements
(Unaudited)

of

ROYAL CANADIAN MOUNTED POLICE

For the year ended
March 31, 2010

Statement of Management Responsibility

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial information for the year ended March 31, 2010 rests with the management of the Royal Canadian Mounted Police (RCMP). The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted for Part III of Estimates (Report on Plans and Priorities), and will be used in the department's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives. Much of the future-oriented financial information is based on these assumptions, best estimates, and judgment and gives due consideration to materiality. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented and the variations may be material. The department is preparing these statements as part of a two year pilot project and readers should be cautioned that this is the first year of the pilot. The future-oriented financial statements of the RCMP have not been audited.

William J.S. Elliott, Commissioner

Alain P. Séguin, Chief Financial and Administrative Officer

Future-Oriented Statement of Operations (Unaudited)

For the year ended March 31, 2010
(in thousands of dollars)

	2010
Expenses (Note 6)
Community, Contract and Aboriginal Policing	2,215,661
Federal and International Operations	710,206
Internal Services	626,750
Protective Policing Services	505,371
Technical Policing Operations	207,459
National Police Services	147,107
Other Activities	104,337
Policing Support Services	67,214
Criminal Intelligence Operations	62,446
Firearms Licensing and Support Infrastructure	56,173
Firearms Registration	24,810
Total expenses	4,727,534
Revenues
Community, Contract and Aboriginal Policing	1,601,846
Protective Policing Services	185,796
Internal Services	17,483
National Police Services	4,500
Firearms Registration	8,000
Other Activities	26,865
	1,844,490
Net Cost of Operations	2,883,044
The accompanying notes form an integral part of these future-oriented statements.

ROYAL CANADIAN MOUNTED POLICE
Notes to the Future-Oriented Financial Statements (Unaudited)

For the year ended March 31, 2010

1. Authority and Mandate

The Royal Canadian Mounted Police (RCMP) is Canada’s national police service and an agency of the Department of Public Safety and Emergency Preparedness.

The RCMP mandate is based on the authority and responsibility assigned under section 18 of the Royal Canadian Mounted Police Act. The mandate of the RCMP is to enforce laws, prevent crime, and maintain peace, order and security.

Ten program activities highlight our Program Activity Architecture (PAA). These include:

Community, Contract and Aboriginal Policing

Contributes to safe homes and safe communities by providing police services to diverse communities in eight provinces (with the exception of Ontario and Quebec) and three territories through cost-shared policing service agreements with federal, provincial, territorial, municipal and Aboriginal governments.

Federal and International Operations

Provides policing, law enforcement, investigative, and protective services to the federal government, its departments and agencies and to Canadians.

Technical Policing Operations

Provides policy, advice and management to predict, research, develop and ensure the availability of technical tools and expertise to enable front line members and partners to prevent and investigate crime and enforce the law, protect against terrorism, and operate in a safe and secure environment.

National Police Services

Contributes to safe homes and safe communities for Canadians through the acquisition, analysis, dissemination and warehousing of law enforcement-specific applications of science and technology to all accredited Canadian law enforcement agencies.

Protective Policing Services

Directs the planning, implementation, administration and monitoring of the RCMP National Protective Security Program including the protection of dignitaries, the security of major events and Special Initiatives including Prime Minister-led summits of an international nature.

Criminal Intelligence Operations

A national program for the management of criminal information and intelligence in the detection and prevention of crime of an organized, serious or national security nature in Canada or internationally as it affects Canada.

Policing Support Services

Support services provided in support of the RCMP’s role as a police organization.

Firearms Licensing and Support Infrastructure

Delivery of licensing activities through federal Chief Firearms Officers (CFO) operations, arrangements with other federal government departments, and the management of provincial CFO roles and relationships; operations of the Central Processing Site, the 1-800 call centre; maintenance and analysis of program performance data, management of the Program's information technology infrastructure and its interface with other databases; and support to public agencies and to law enforcement.

Firearms Registration

All activities related to the processing of all firearms registration and transfer applications, including registration on import; support to public agencies and to law enforcement.

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 groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Underlying Assumptions

These future-oriented financial statements have been prepared as at February 9, 2009 on the basis of government policies, government priorities and external environment at the time the future-oriented financial information was finalized. The future-oriented financial information has been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information was prepared on the basis that the resources provided will enable the Royal Canadian Mounted Police to deliver the expected results specified in the Report on Plans and Priorities.

3. Variations and Changes to the Forecast Financial Information

The actual results achieved for the fiscal year covered in these future-oriented financial statements will vary from the information presented and the variations may be material. While every attempt has been made to accurately forecast final results for 2009/10, actual results achieved are likely to vary from the forecast information presented, and this variation could be material. Once the Report on Plans and Priorities (RPP) is presented, RCMP will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

(a) The RCMP is primarily financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the department do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a high-level reconciliation between the bases of reporting.

(b) The department operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the RCMP is deposited to the CRF and all cash disbursements made by the RCMP are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.

(c) Revenues are accounted for in the period in which the underlying transactions or events occurred that gave rise to the revenues. Revenues that have been received but not yet earned or not spent in accordance with any external restrictions are recorded as deferred revenues.

(d) Expenses are recorded when the underlying transaction or expense occurred subject to the following:

• Grants are recognized in the year in which payment is due or in which the recipient has met the eligibility criteria.
• Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.
• Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
• Services provided without charge by other government departments for accommodation,
  the employer’s contribution to the health and dental insurance plans, Worker’s compensation and legal services are recorded as operating expenses at their estimated cost.

(e) Employee future benefits

• Pension benefits for Public Service employees: Eligible employees participate in the Public Service Pension Plan, a multi-employer Plan administered by the Government of Canada. The department’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the department to make contributions for any actuarial deficiencies of the Plan.
• Pension benefits for RCMP members: The Government of Canada sponsors a variety of employee future benefits such as pension plans and disability benefits, which cover members of the RCMP. The department administers the pension benefits for members of the RCMP. The actuarial liability and related disclosures for these future benefits are presented in the financial statements of the Government of Canada. This differs from the accounting and disclosures of future benefits for RCMP presented in these financial statements whereby pension expense corresponds to the department’s annual contributions toward the cost of current service. In addition to its regular contributions, current legislation also requires the department to make contributions for actuarial deficiencies in the RCMP Pension Plan. These contributions are expensed in the year they are credited to the Plan. This accounting treatment corresponds to the funding provided to departments through Parliamentary appropriations.
• Severance benefits: Employees and RCMP members are entitled to severance benefits under labor 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 and RCMP members is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(f) 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. Capital assets do not include intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves and museum collections.

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

Asset Class	Sub-asset Class	Amortization Period
Buildings		20 to 30 years
Works and Infrastructures		20 years
Machinery and Equipment	Machinery and Equipment	5 to 15 years
	Informatics – Hardware	4 to 7 years
	Informatics – Software	3 to 7 years
Vehicles	Marine Transportation	10 to 15 years
	Air Transportation	10 years
	Land Transportation (non-military)	3 to 5 years
	Land Transportation (military)	10 years
Leasehold Improvements		Term of lease

In the normal course of business, the RCMP constructs buildings and other assets as well as develops software. The associated costs are accumulated in Assets under Construction (AUC) until the asset is in use. No amortization is taken until the asset is put in use.

(g) Intellectual property such as licences, patents and copyrights are expensed in the period in which they are incurred.

(h) Measurement uncertainty – The preparation of these financial statements in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector requires management to make estimates and assumptions that affect the reported 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. 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.

5. Parliamentary Appropriations

The RCMP receives most of its funding through annual Parliamentary appropriations. Items
recognized in the Statement of Operations in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the RCMP 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:

	Forecast (in thousands of dollars)
	2010
Net cost of operations	2,883,044
Items affecting net cost of operations but not affecting appropriations
Revenue not available for spending	112,865
Amortization	(159,860)
Services provided without charge from OGDs	(280,000)
Provision for severance benefits	(29,799)
Items affecting appropriations but not affecting net cost of operations
Acquisition of tangible assets	327,845
Appropriations available for use	2,854,095

(b) Appropriations available for use

	Forecast (in thousands of dollars)
	2010
Appropriations available for use
Operating Authority	1,998,577
Capital Authority	327,845
Grants and Contributions Authority	118,824
Statutory amounts	408,849
Total Appropriations available for use	2,854,095

6. Forecast Expenses

The following table presents details of expenses by category:

		Forecast (in thousands of dollars)
		2010
Operating expenses:	Salaries and employee benefits	3,029,912
	Professional & special services	412,605
	Travel & relocation	208,459
	Amortization	159,860
	Accommodation	146,500
	Utilities, material & supplies	145,251
	Purchased repairs & maintenance	122,251
	Telecommunications	60,059
	Rentals	37,044
	Provision for severance benefits	29,799
	Information	5,700
	Other operating expenses	251,270
	Subtotal	4,608,710
Transfer payments:	Compensatory grants to individuals	103,337
	Transfers to other levels of government	14,487
	Other transfer payments	1,000
	Subtotal	118,824
Total Expenses		4,727,534

7. Related Party Transactions

The RCMP is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The RCMP enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year the RCMP received without charge from other departments, accommodation, the employer’s contribution to the health and dental insurance plans, worker’s compensation and legal services. These services without charge have been recognized in the department’s Statement of Operations as follows:

Services provided without charge from other government departments:

	Forecast Spending (in thousands of dollars)
	2010
Contributions covering employer's share of employees insurance premiums and expenditures by Treasury Board Secretariat	198,000
Accommodation provided by Public Works and Government Services	79,100
Legal services provided by Department of Justice	2,600
Workers' compensation cost provided by Human Resources Canada	300
Total	280,000

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the department’s Statement of Operations.

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