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Future-oriented Financial Information

Treasury Board of Canada Secretariat
Future-oriented Statement of Operations
For the year ended March 31, 2010

Statement of Management Responsibility for Financial Statements

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 Treasury Board of Canada Secretariat (Secretariat). 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 the Estimates (Reports on Plans and Priorities) and will be used in the Secretariat's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based on information available and known to management at the time of development, reflect current business and economic conditions, and assume the continuation of current governmental priorities and consistency in the 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 will vary from the forecast information presented, and this variation could be material.

The readers should be advised that the Secretariat is preparing this statement as part of pilot project involving ten departments. This is the first year of a two-year project to develop the methodology to prepare departmental future-oriented financial statements.

Original signed by Wayne G. Wouters Secretary of the Treasury Board Ottawa, Canada Dated: February 16, 2009

Original signed by Kelly Gillis, CA Assistant Secretary and CFO Ottawa, Canada Dated: February 16, 2009

Treasury Board of Canada Secretariat
Future-oriented Statement of Operations
For the year ended March 31

	Forecast 2010 ($ thousands)
Expenses (Note 6)
Government-wide Funds and Public Service Employer Payments	2,112,764
Expenditure Management and Financial Oversight	41,856
Management Policy Development and Oversight	126,179
Internal Services	72,660
	2,353,459
Revenues (Note 7)
Government-wide Funds and Public Service Employer Payments	11,762
Expenditure Management and Financial Oversight	—
Management Policy Development and Oversight	4,879
Internal Services	—
	16,641
Net Cost of Operations	2,336,818

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

Treasury Board of Canada Secretariat
Notes to the Future-oriented Financial Information
For the year ended March 31

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. It 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 program activities:

a) Government-wide Funds and Public Service Employer Payments

Funds are held centrally to supplement other appropriations, and payments and receipts are made on behalf of other federal government departments and agencies in an administratively sound and efficient manner.

b) Expenditure Management and Financial Oversight

The Secretariat exercises a budget office role and undertakes the following key functions to support this role:

• Providing advice to ministers with respect to resource allocation and re-allocation and the provision of expenditure authorities;
• Undertaking government-wide expenditure and performance analysis and oversight of estimates and government supply; and
• Ensuring that accurate and timely financial and performance information from departments and agencies is available and reported to support Public Accounts and budget office functions.

c) Management Policy Development and Oversight

Through this program activity, the Secretariat provides support to the Treasury Board in both its role as employer of the core public administration and its role as the management board of government, while also promoting good management practices across government.

The Secretariat supports the Treasury Board in its management board role by:

• Developing polices, directives and standards to guide good management across government;
• Monitoring compliance and developing tools to measure and report on management performance; and
• Providing advice and support to functional communities.

d) Internal Services

This program activity is intended to ensure that the Secretariat is well managed and accountable, and resources are allocated to achieve results. This includes the following key functions related to supporting Treasury Board and the internal management of the Secretariat:

• Ensuring effective and efficient corporate services;
• Ensuring effective corporate governance and accountability;
• Providing integrated support to Treasury Board; and
• Advising on the communication of policies, programs, and services and providing effective internal and external communications.

2. Underlying Assumptions

These future-oriented statements have been prepared:

• As at February 13, 2009, including elements of Budget 2009 where a reasonable estimate could be defined;
• On the basis of government policies, government priorities, and the external environment at the time the future-oriented financial information was finalized;
• According to the requirements of Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector;
• On the basis that the resources provided will enable the Secretariat to deliver the expected results specified in its Report on Plans and Priorities; and
• On the basis of historical costs.

3. Variations and Changes to the Forecast Financial Information

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.

These financial statements do not reflect the most recent decisions on the horizontal review of the central human resources management and policy functions as announced in the federal budget.

On February 6, 2009, the Prime Minister announced changes to streamline and improve the management of human resources in the Public Service of Canada. As a result, the Canada Public Service Agency will no longer operate as a separate entity. It will be housed within the Secretariat under the new Office of the Chief Human Resources Officer. This will impact the financial results of the Secretariat for fiscal year 2009–10 onward. The financial impact of this decision is not reflected in these statements.

Once the Report on Plans and Priorities is presented, the Secretariat will not be updating the forecasts for any changes to appropriations or financial information made in ensuing Supplementary Estimates. Variances will be explained in the Secretariat's Departmental Performance Report.

4. Summary of Significant Accounting Policies

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.

Significant accounting policies are as follows:

a) Parliamentary appropriations

The Secretariat is financed by the Government of Canada through parliamentary appropriations. Appropriations provided to the Secretariat do not parallel financial reporting according to generally accepted accounting principles because 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) Net cash provided by the Government of Canada

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 the Government of Canada is the difference between all cash receipts and all cash disbursements, including transactions between departments and agencies of the federal government.

c) Forecasted revenues

Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenues took place.

d) Forecasted expenses

Expenses are recorded on the accrual basis:

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

e) Government-wide employee benefits

Eligible public service employees participate in the Public Service Pension Plan sponsored by the Government of Canada. Contributions to the Plan for all departments and agencies, including additional contributions in respect of any actuarial deficiencies, are funded by the Secretariat as centrally managed funds, and they are expensed in the year incurred. The Secretariat recovers a portion of the pension contributions from other departments and agencies.

The Government of Canada also sponsors a variety of other benefit plans that the Secretariat is responsible for administering and/or funding through its centrally managed funds. These benefits are recognized to expenses when they become due. A portion of these benefits is also recovered from other departments and agencies.

For the pension benefits and other future employee benefits covered by these plans, actuarially determined liabilities and related disclosure are presented in the financial statements of the Government of Canada, the ultimate sponsor of these benefits. As administrator of the centrally managed funds, the Secretariat expenses these benefits or contributions as they become due and records no accruals for future benefits. This accounting treatment corresponds to the funding provided to the department through parliamentary appropriations.

f) Departmental employee future benefits

Pension benefits: Eligible employees of the Secretariat participate in the Public Service Pension Plan. The Secretariat's share of contributions pertaining to the current service cost of its employees is allocated to the expenses of all program activities except for Government-wide Funds and Public Service Employer Payments.

Severance benefits: Employees are entitled to severance benefits, as provided for 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 of the Secretariat 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.

g) 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
Machinery and equipment	3 to 10 years
Motor vehicles	3 years
Leasehold improvements	Term of lease
Assets under construction	Once in service, in accordance with asset class

h) Measurement uncertainty

The preparation of the future-oriented financial information requires management to make estimates and assumptions that affect the reported amounts of all the assets, liabilities, revenues, and expenses reported in the future-oriented financial statements. Assumptions are based on information available and known to management at the time of development, reflect current business and economic conditions, and assume the continuation of current governmental priorities and consistency in the departmental mandate and strategic objectives. At the time of preparation of the future-oriented statement of operations, management believes the estimates and assumptions to be reasonable. However, as with all such estimates and assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

5. Parliamentary Appropriations

The Secretariat 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 year. 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 appropriations used

	Forecast 2010 ($ thousands)
Net cost of operations	2,336,818
Adjustment for items affecting net cost of operations but not affecting appropriations:
Add (Less):
Services provided without charge from other government departments	(19,035)
Revenue not available for spending	12,661
(Increase) in vacation pay and compensatory leave	(805)
(Increase) in employee severance benefits	(3,161)
Amortization of tangible capitals assets	(1,551)
	(11,891)
Appropriations used	2,324,927

b) Appropriations provided and used

	Forecast 2010 ($ thousands)
Voted Authorities:
Vote 1—Program expenditures	175,374
Vote 5—Government Contingencies	750,000
Vote 10—Government-Wide Initiatives	6,636
Vote 20—Public Service Insurance	2,103,044
Vote 25—Operating Budget Carry Forward	1,200,000
Vote 30—Paylist Requirements	500,000
Vote 35—Budget Implementation Initiatives	3,000,000
	7,735,054
Statutory Authorities:
President of the Treasury Board—Salary and motor car allowance	78
Contributions to employee benefit plans	22,024
Payments under the Public Service Pension Adjustment Act	20
Payments for the pay equity settlement pursuant to section 30 of the Crown Liability and Proceedings Act	200
Unallocated employer contributions made under the Public Service Superannuation Act, other retirement acts, and the Employment Insurance Act	9,500
Spending of proceeds from the disposal of surplus Crown assets	—
	31,822
Pending Approval:
Vote 1—Program expenditures	14,687
	14,687
Lapsed Authorities:
Vote 1—Program expenditures	—
Vote 20—Public Service Insurance	—
	—
Transferred or Lapsed Authorities:
Vote 5—Government Contingencies	(750,000)
Vote 10—Government-Wide Initiatives	(6,636)
Vote 25—Operating Budget Carry Forward	(1,200,000)
Vote 30—Paylist Requirements	(500,000)
Vote 35—Budget Implementation Initiatives	(3,000,000)
	(5,456,636)
Appropriations used	2,324,927

6. Forecasted Expenses

a) Details of expenses by category and by program activity

		Forecast 2010 ($ thousands)
	Total	G-WF&PSEP1	EM&FO2	MPD&O3	IS4
Transfer payment	200	—	—	200	—
Operating expenses:
Government-wide Funds and Public Service Employer Payments (Note 6b)	2,110,820	2,110,820	—	—	—
Salary and employee benefits	163,792	—	30,890	91,607	41,295
Professional and special services	43,912	—	4,994	19,498	19,420
Accommodation	15,949	—	2,573	7,484	5,892
Transportation and telecommunications	4,986	—	609	2,383	1,994
Machinery, equipment, parts, and tools	3,457	—	423	1,650	1,384
Repairs and maintenance	3,293	—	402	1,574	1,317
Utilities, materiel, and supplies	1,131	—	138	540	453
Information	659	—	103	401	155
Rentals	751	—	92	358	301
Amortization	1,551	—	1,508	—	43
Other subsidies and payment	2,958	1,944	124	484	406
	2,353,259	2,112,764	41,856	125,979	72,660
Total Expenses	2,353,459	2,112,764	41,856	126,179	72,660

1. Government-wide Funds and Public Service Employer Payments
2. Expenditure Management and Financial Oversight
3. Management Policy Development and Oversight
4. Internal Services

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 funds the employer's contributions to the Public Service Pension Plan and Retirement Compensation Arrangement, including additional contributions in respect of actuarial deficiencies.

The Secretariat also funds payments to or in respect of:

• The employer's share of contributions to the Public Service Death Benefit Account;
• The employer's share of Canada/Quebec Pension Plan contributions and Employment Insurance premiums;
• The employer's share of health, disability, and life insurance premiums and related Quebec sales tax;
• Claims and related costs under the Public Service Dental Care Plan and the Pensioners' Dental Services Plan;
• Provincial payroll taxes;
• Pension, benefit, and insurance plans for employees engaged locally outside Canada by Canadian missions abroad; 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/Quebec Pension Plan contributions, and Employment Insurance premiums are recovered from all departments, agencies, and revolving funds pro-rata, based on salaries and wages incurred. Contributions to health care plans are recovered from certain departments and agencies and all revolving funds based on a percentage of salaries and wages incurred.

A breakdown by major category is as follows:

	Forecast 2010 ($ thousands)
Expenses:
Public Service Pension Plan and Retirement Compensation Arrangement contributions	2,254,463
Public Service Pension Plan and Retirement Compensation in respect of actuarial deficits	9,500
Public Service Death Benefit Account contributions	17,798
Canada/Quebec Pension Plan contributions	582,976
Employment Insurance premiums	267,288
Employment Insurance premiums reduction	1,300
Quebec Parental Insurance Plan premiums	28,000
Public Service Health Care Plan premiums	967,956
Public Service Dental Care Plan claims	253,928
Pensioners' Dental Services Plan claims	116,238
Provincial Health Insurance Plan premiums	40,123
Provincial payroll taxes	505,806
Group disability and life insurance premiums	441,054
Pension and other government employee benefits in respect of locally engaged staff employed in Canadian missions abroad	48,360
Pension and similar payments to former government employees (transfer payment)	520
Miscellaneous special payments	200
Operating expenses	—
	5,535,510
Recoveries:
Employer's contributions to government employee benefit plans recovered from government departments and agencies	3,122,525
Employer's contributions to government employee insurance plans recovered from government departments and agencies	132,000
Employees' contributions to Public Service Health Care Plan recovered from government departments and agencies	125,165
Pensioners' contributions to the Pensioners' Dental Services Plan	45,000
	3,424,690
Net Expenses	2,110,820

7. Forecasted Revenues

The following table presents details of revenues by category and by program activity:

		Forecast 2010 ($ thousands)
	Total	G-WF&PSEP	M&FO	MPD&O	IS
Parking fees	11,742	11,742	—	—	—
Recovery of pension administration costs	4,879	—	—	4,879	—
Other revenues	20	20	—	—	—
Total Revenues	16,641	11,762	—	4,879	—

8. Related-Party Transactions

Services provided without charge

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.

During the year, the Secretariat received without charge services from other departments as shown in the following table:

	Forecast 2010 ($ thousands)
Accommodation	15,949
Legal services	3,086
Total	19,035

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 departments without charge. The cost of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada (PWGSC), are not included as an expense in the Statement of Operations. The forecast is the amount provided by the Department of Justice Canada and PWGSC.

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