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Section III: Supplementary Information

Table 1: Departmental Link to Government of Canada Outcome Areas

Strategic Outcome:	Toward effective government policies and operations, the Privy Council Office ensures that decision making by the Prime Minister and Cabinet is well supported and the institutions of executive government are well supported and maintained.
	Actual Spending 2007-2008			Alignment to Government of Canada Outcome Number Four
	Budgetary	Non-budgetary	Total
1. Support for Cabinet decision making and the legislative agenda	5,121	-	5,121	Government Affairs
2. Advice to the Prime Minister and ministers on issues, policies, machinery and appointments	53,892	-	53,892
3. Provide Cabinet with sound advice on the development, coordination and implementation of the policy agenda	23,239	-	23,239
4. As its head, the Clerk leads the Public Service in effectively supporting Cabinet and serving Canadians	9,638	-	9,638
5. Provide the Prime Minister’s Office and the offices of the portfolio ministers with financial and administrative support	28,401	-	28,401
6. Provide commissions of inquiry with appropriate administrative support	17,401	-	17,401
Total	137,692	-	137,692

All PCO’s program activities support the Government of Canada outcome number four: “Government Affairs.” PCO plays an important, supportive role to ensure a whole-of-government approach and integrated response to issues that affect Canadians. It works across portfolio boundaries and helps other government departments and agencies meet their responsibilities, deliver on their core mandates and, ultimately, serve Canadians better.

Table 2: Comparison of Planned to Actual Spending (including FTEs)

	2005-2006 Actual	2006-2007 Actual	2007-2008
			Main Estimates	Planned Spending	Total Authorities	Actual Spending
	(thousands of dollars)
Support for Cabinet decision making and the legislative agenda	6,057	5,396	5,435	5,458	5,559	5,121
Advice to the Prime Minister and ministers on issues, policies, machinery and appointments	65,534	54,894	59,216	59,516	62,679	53,892
Provide Cabinet with sound advice on the development, coordination and implementation of the policy agenda	30,845	25,589	22,557	22,666	24,367	23,239
As its head, the Clerk leads the Public Service in effectively supporting Cabinet and serving Canadians	8,719	8,839	7,183	7,197	7,757	9,638
Provide the Prime Minister’s Office and the offices of the portfolio ministers with financial and administrative support	34,361	27,574	27,204	27,521	29,094	28,401
Provide commissions of inquiry with appropriate administrative support	16,802	13,269	5,708	5,708	20,007	17,401
Total	162,318	135,561	127,303	128,067	149,463	137,692
Less: Non‑respendable revenue	1,256	1,581		850	850	1,837
Plus: Cost of services received without charge	22,427	18,097		16,928	16,928	17,489
Total Departmental Spending	183,489	152,077	127,303	144,145	165,541	153,344
Full-time Equivalents	1,032	904	937	937	937	912

Variation between Total Main Estimates and Total Planned Spending

The increase of $0.8 million is due to:

• compensation for collective agreements ($0.6 million)

• funding received for the new internal audit requirements ($0.2 million) 

Variation between Total Planned Spending and Total Authorities

The $21.4 million increase is due to:

• funding of $14.6 million for the commissions of inquiry into:
  
  
  • the Actions of Canadian Officials in relation to Abdullah Almalki, Ahmad Abou-Elmaati and Muayyed Nureddin ($7.7 million)
  • the Investigation of the Bombing of Air India Flight 182 ($6.5 million)
  • the Actions of Canadian Officials in Relation to Maher Arar ($0.4 million)

• funding for the departmental 2006-2007 Operating Budget Carry Forward of $5.8 million

• funding of $0.9 million for the office of the Coordinator for the 2010 Olympics and G8 Security

• compensation for collective bargaining of $0.9 million

• funding of $0.8 million for the office of the Independent Advisor for the Review of Allegations Respecting the Financial Dealings Between Mr. Karlheinz Schreiber and the Right Honourable Brian Mulroney, in order to make recommendations for an appropriate mandate for a public inquiry

• funding of $0.1 million for activities to implement the Public Service Modernization Act

• proceeds of $0.1 million from the disposal of surplus Crown assets

• offset by $1.8 million for an adjustment to the Employee Benefit Plan rate

Variation between Total Authorities and Total Actual Spending

The $11.8 million surplus is explained as follows:

Variation between Actual Spending 2006-2007 and Actual Spending 2007-2008

The increase of $2.1 million is mainly due to:

• An increase in the activity level related to the commissions of inquiry by $4.1 million. Although the number of ongoing inquiries was the same for both years, there were two commissions fully operational for the entire year in 2007‑2008 compared to one for 2006-2007.

• An increase in spending of $2.8 million due to new initiatives undertaken in 2007‑2008. Some of these initiatives are:
  
  
  • Public Service Renewal
  • 2010 Olympics and G8 Security
  • Independent advisor for the Review of Allegations Respecting the Financial Dealings between Mr. Karlheinz Schreiber and the Right Honourable Brian Mulroney
  • Audit and Evaluation
  • Emergency Planning
  • Afghanistan Task Force

Offset by:

• A reduction in spending of $2.6 million as a result of PCO returning to core functions and the ending of several initiatives in 2006-2007 such as:
  
  
  • Policy Research
  • Regulatory Affairs
  • Regional Offices (Communications)

• Reduced accommodation charges of $1.2 million due to contracts not materializing with PWGSC and to lower renovations and refitting requirements in 2007-2008.

• A reduction $1.0 million in salary-related costs such as severance and separation pay.

Table 3: Voted and Statutory Items (thousands of dollars)

Vote or Statutory Item	Truncated Vote or Statutory Wording	2007-2008
		Main Estimates	Planned Spending	Total Authorities	Actual
1	Program expenditures	114,162	114,820	137,270	125,531
(S)	The Prime Minister’s salary and motor car allowance	153	153	153	153
(S)	President of the Queen’s Privy Council for Canada, Minister of Intergovernmental Affairs and Minister of Western Economic Diversification – Salary and motor car allowance	75	75	74	74
(S)	Leader of the Government in the Senate – Salary and motor car allowance	75	75	74	74
(S)	Ministers without Portfolio or Ministers of State – Motor car allowance	-	-	4	4
(S)	Contributions to employee benefit plans	12,839	12,944	11,837	11,837
(S)	Spending of proceeds from the disposal of surplus Crown assets	-	-	51	19
Total		127,303	128,067	149,463	137,692

Table 4: Sources of Non-Respendable Revenue

For supplementary information on the department’s sources of respendable and non-respendable revenue please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 5: User Fees

For supplementary information on the department’s User Fees, please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 6: Response to Parliamentary Committees and External Audits

For supplementary information on the department’s response to Parliamentary Committees and External Audits please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 7: Internal Audits and Evaluations

For supplementary information on the department's Internal Audits and Evaluations, please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 8: Travel Policies

The Privy Council Office follows the Treasury Board of Canada Secretariat Special Travel Authorities.

The Privy Council Office follows the Treasury Board of Canada Secretariat Travel Directive, Rates and Allowances.

Table 9: Financial Statements of PCO

Privy Council Office
Financial Statements
For The Year Ended March 31, 2008

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2008, and all information contained in these statements rests with departmental 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 fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Privy Council Office’s financial transactions. Financial information submitted to the Public Accounts of Canada and included in the Privy Council Office’s Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable; that assets are safeguarded; and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the Privy Council Office.

The financial statements of the Privy Council Office have not been audited.

Marilyn MacPherson
Assistant Deputy Minister
Corporate Services

Ottawa, Ontario
August 08, 2008

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Privy Council Office
Statement of Operations (Unaudited)

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for the year ended March 31, 2008

Expenses (Note 4)	2008	2007
	(in thousands of dollars)
Support for Cabinet decision making and the legislative agenda	6,071	6,989
Advice to the Prime Minister and ministers on issues, policies, machinery and appointments	59,032	64,806
Provide Cabinet with sound advice on the development, coordination and implementation of the policy agenda	25,349	30,788
As its head, the Clerk leads the Public Service in effectively supporting Cabinet and serving Canadians	10,830	7,305
Provide the Prime Minister’s Office and the offices of the portfolio ministers with financial and administrative support	33,062	33,284
Provide commissions of inquiry with appropriate administrative support	16,472	13,538
Total Expenses	150,816	156,710
Revenues (Note 5)
Support for Cabinet decision making and the legislative agenda	2	1
Advice to the Prime Minister and ministers on issues, policies, machinery and appointments	24	10
Provide Cabinet with sound advice on the development, coordination and implementation of the policy agenda	9	4
As its head, the Clerk leads the Public Service in effectively supporting Cabinet and serving Canadians	5	10
Provide the Prime Minister’s Office and the offices of the portfolio ministers with financial and administrative support	14	7
Provide commissions of inquiry with appropriate administrative support	2	-
Total Revenues	56	32
Net Cost of Operations	150,760	156,678

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

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Privy Council Office
Statement of Financial Position (Unaudited)

---

at March 31, 2008

Assets	2008	2007
	(in thousands of dollars)
Financial assets
Accounts receivable and advances (Note 6)	2,437	6,481
Total financial assets	2,437	6,481
Non-financial assets
Prepaid expenses	349	696
Tangible capital assets (Note 7)	9,093	9,376
Total non-financial assets	9,442	10,072
Total	11,879	16,553
Liabilities and Equity of Canada
Liabilities
Accounts payable and other liabilities (Note 8)	17,220	20,120
Vacation pay and compensatory leave	5,244	7,864
Employee severance benefits (Note 9)	14,300	14,679
Total liabilities	36,764	42,663
Equity of Canada	(24,885)	(26,110)
Total	11,879	16,553

Contingent liabilities (Note 10)
Contractual obligations (Note 11)
The accompanying notes form an integral part of these financial statements.

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Privy Council Office
Statement of Equity (Unaudited)

---

at March 31, 2008

	2008	2007
	(in thousands of dollars)
Equity of Canada, beginning of year	(26,110)	(25,910)
Net cost of operations	(150,760)	(156,678)
Refund and adjustment of previous year expenditures	(1,781)	(1,548)
Revenue not available for spending	(56)	(32)
Services provided without charge by other government departments (Note 12)	17,489	18,097
	(135,108)	(140,161)
Current year appropriations used (Note 3)	137,692	135,561
Change in net position in the Consolidated Revenue Fund (Note 3c)	(1,359)	4,400
Equity of Canada, end of year	(24,885)	(26,110)

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

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Privy Council Office
Statement of Cash Flow (Unaudited)

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for the year ended March 31, 2008

	2008	2007
	(in thousands of dollars)
Operating Activities
Net cost of operations	150,760	156,678
Non-cash items
Amortization of tangible capital assets (Note 7)	(2,696)	(3,401)
Loss on disposal of tangible capital assets	(69)	-
Other	209	-
Services provided without charge by other government departments (Note 12)	(17,489)	(18,097)
	(20,045)	(21,498)
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances	(4,044)	4,564
Increase (decrease) in prepaid expenses	(347)	487
(Increase) decrease in liabilities:
Accounts payable and other liabilities	2,900	(580)
Vacation pay and compensatory leave	2,620	(2,536)
Employee severance benefits	379	(1,784)
	1,508	151
Cash used by operating activities	132,223	135,331
Capital Investment Activities
Acquisition of tangible capital assets (Note 7)	1,919	3,337
Net cost of tangible capital asset transfers	-	(120)
Work in progress	354	(167)
Cash used by capital investment activities	2,273	3,050
Net cash provided by Government of Canada	134,496	138,381

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

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Privy Council Office
Notes to Financial Statements (Unaudited)

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for the year ended March 31, 2008

1. Authority and Purpose

The Privy Council Office is a division of the Public Service of Canada as set out in column 1 of Schedule I.1 of the Financial Administration Act and reports to Parliament through the Prime Minister.

The Privy Council Office reports directly to the Prime Minister and is headed by the Clerk of the Privy Council and Secretary to the Cabinet. The Clerk is also the Head of the Public Service. The mandate of the Privy Council Office is to serve Canada and Canadians by providing the best non-partisan advice and support to the Prime Minister, ministers within the Prime Minister’s portfolio and Cabinet. PCO’s work requires close and continuous contact with other federal departments and agencies to support their ability to work effectively and to ensure overall consultation and coordination.

Commissions of inquiry established under the Inquiries Act are designated as departments under the Financial Administration Act and the Prime Minister is designated as the “appropriate Minister” under that same Act. PCO provides administrative and financial management support to commissions. In 2007-08, the same commissions as in 2006-07 were supported by PCO: the Commission of Inquiry into the Actions of Canadian Officials in Relation to Maher Arar, the Commission of Inquiry into the Investigation of the Bombing of Air India Flight 182, and the Commission of Inquiry into the Actions of Canadian Officials in Relation to Abdullah Almalki, Ahmad Abou-Elmaati and Muayyed Nureddin.

2. Significant Accounting Policies

The financial statements have been prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector. Significant accounting policies are as follows:

1. Parliamentary appropriations: The Privy Council Office is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the department do not parallel financial reporting according to Canadian generally accepted accounting principles 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 bases of reporting.
   
2. Net cash provided by government: The Privy Council Office operates within the Consolidated Revenue Fund (CRF). The CRF is administered by the Receiver General for Canada. All cash received by the Privy Council Office is deposited to the CRF and all cash disbursements made by the Privy Council Office 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.
   
3. Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the Privy Council Office. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
   
4. Revenues:
   
   
   • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
     
   • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
     
5. 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, the employer’s contribution to the health and dental insurance plans, legal services and worker’s compensation coverage are recorded as operating expenses at their estimated cost.
     
6. Employee future benefits:
   
   
   • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The Privy Council Office’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 Privy Council Office to make contributions for any actuarial deficiencies of the plan.
     
   • 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.

   Accounts receivable and advances are stated at amounts expected to be ultimately realized. A provision is made for receivables where recovery is considered uncertain.

   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 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.

   Tangible capital assets having an initial cost of $5,000 or more are recorded at their acquisition cost. The Privy Council Office does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value. Work in progress is only amortized when the related projects are completed and their amortization is based on the estimated useful life of the asset. Amortization of capital assets is done on a straight‑line basis over the estimated useful life of the capital asset as follows:

   
   

   Asset Class	Amortization Period
   Machinery and equipment	5 to 15 years
   Informatics hardware	3 to 5 years
   Informatics software	3 to 5 years
   Other equipment	10 to 15 years
   Motor vehicles	3 to 10 years

   
   
7. 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 these 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 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 Privy Council Office 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 Privy Council Office has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to current year appropriations used:

	2008		2007
	(in thousands of dollars)
Net cost of operations	150,760		156,678
Adjustments for items affecting net cost of operations but not affecting appropriations:
Add (less):
Amortization of tangible capital assets	(2,696)		(3,401)
Loss on disposal of tangible capital assets	(69)		-
Services provided without charge by other government departments (Note 12)	(17,489)		(18,097)
Prepaid expenses	347		696
Vacation pay and compensatory leave	2,620		(2,536)
Employee severance benefits	379		(1,784)
Accounts payable and other liabilities	-		15
Refund and adjustment of previous year expenditures	1,781		1,548
Revenue not available for spending	56		32
Other	84		(927)
	(14,987)		(24,454)
Adjustments for items not affecting net cost of operations but affecting appropriations:
Add:
Acquisition of tangible capital assets	1,919		3,337
Current year appropriations used	137,692		135,561

b) Appropriations provided and used:

	2008		2007
	(in thousands of dollars)
Vote  - Operating expenditures	137,271		135,698
Statutory amounts	12,193		12,661
Less:
Appropriations available for future years	(32)		(18)
Lapsed appropriations: Operating	(11,740)		(12,780)
Current year appropriations used	137,692		135,561

c) Reconciliation of net cash provided by government to current year appropriations used:

	2008		2007
	(in thousands of dollars)
Net cash provided by government	134,496		138,381
Refund and adjustment of previous year expenditures	1,781		1,548
Revenue not available for spending	56		32
	136,333		139,961
Change in net position in the Consolidated Revenue Fund
Variation in accounts receivable and advances	4,059		(4,561)
Variation in prepaid expenses	-		209
Variation in accounts payable and other liabilities	(2,701)		596
Other	1		(644)
	1,359		(4,400)
Current year appropriations used	137,692		135,561

4. Expenses

The following table presents details of expenses by category:

	2008		2007
	(in thousands of dollars)
Salaries and employee benefits	92,011		96,900
Professional and special services	23,489		20,926
Accommodation	12,647		13,244
Transportation and telecommunications	6,224		6,578
Acquisition of machinery and equipment	5,479		5,879
Information	2,784		3,886
Amortization of tangible capital assets (Note 7)	2,696		3,401
Utilities, materials and equipment	1,588		1,617
Transfer payments	1,389		408
Rental	1,137		703
Other	681		485
Purchased repair and maintenance	622		2,683
Loss on disposal of tangible capital assets	69		-
Total	150,816		156,710

5. Revenues

The following table presents details of revenues by category:

	2008		2007
	(in thousands of dollars)
Gain on disposal of tangible assets	32		17
Regulatory fees	5		10
Miscellaneous revenues	4		4
Gain on foreign exchange	15		1
Total	56		32

6. Accounts Receivable and Advances

The following table presents details of accounts receivable and advances:

	2008		2007
	(in thousands of dollars)
Receivables from other federal government departments and agencies	1,917		6,057
Receivables from external parties	544		465
Employee advances	25		23
Subtotal	2,486		6,545
Less: Allowance for doubtful accounts on external receivables	49		64
Total	2,437		6,481

7. Tangible Capital Assets

(in thousands of dollars)	Cost					Accumulated Amortization
Capital Asset Class	Opening Balance	Acquisi-tions1	Disposal and write-offs 2	Closing Balance		Opening Balance	Amortiza-tion 3	Disposal and write-offs 2	Closing Balance	Net Book Value 2008 4	Net Book Value 2007
Machinery and equipment	40	-	-	40		28	1	-	29	11	12
Informatics hardware	11,242	1,230	(1,066)	11,406		7,998	1,403	(1,058)	8,343	3,063	3,244
Informatics software	4,340	324	(99)	4,565		3,333	512	-	3,845	720	1,007
Other equipment	7,344	1,209	(982)	7,571		2,568	724	(131)	3,161	4,410	4,776
Motor vehicles	415	181	(79)	517		272	56	(71)	257	260	143
Work-in-progress - software	14	319	-	333		-	-	-	-	333	14
Work-in-progress - other	180	116	-	296		-	-	-	-	296	180
	23,575	3,379	(2,226)	24,728		14,199	2,696	(1,260)	15,635	9,093	9,376

1. Total acquisitions of $3,379,000 comprise regular acquisitions of capital assets ($1,919,000), creation of new work in progress ($354,000) and adjustments ($1,106,000).
2. Net disposals and write-offs of -$966,000 comprise regular dispositions of capital assets (-$468,000), accumulated depreciation ($399,000) and adjustments (-$897,000).
3. Amortization expense for the year ended March 31, 2008, is $2,696,000 (2007 - $3,401,000).
4. Due to the implementation of a new financial system in 2006-07, some transactions were not processed correctly and as a result an immaterial adjustment of $209,000 was process in 2007-08.

8. Accounts Payable and Other Liabilities

The following table presents details of accounts payable and other liabilities:

	2008		2007
	(in thousands of dollars)
Payables to external parties	12,845		12,890
Payables to other federal government departments and agencies	3,258		5,960
Other liabilities	966		920
Contingent liabilities (Note 10)	151		350
Total	17,220		20,120

9. Employee Benefits

1. Pension benefits: The Privy Council Office’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 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and are indexed to inflation.

   Both the employees and the department contribute to the cost of the Public Service Pension Plan. The 2007-08 expense amounts to $10,723,836 ($9,079,000 in 2006-07), which represents approximately 2.1 times (2.2 in 2006-07) the contributions by employee.

   The Privy Council Office’s responsibility with regard to the plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the plan’s sponsor.

2. Severance benefits: The Privy Council Office provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:
   

   	2008		2007
   	(in thousands of dollars)
   Accrued benefits obligation, beginning of year	14,679		12,895
   Expense for the year	345		2,923
   Benefits paid during the year	(724)		(1,139)
   Accrued benefits obligation, end of year	14,300		14,679

   
   

10. Contingent Liabilities

Claims and litigations

Claims have been made against the Privy Council Office in the normal course of operations. Legal proceedings for claims totaling approximately $151,028 were still pending at March 31, 2008 ($350,000 in 2006-2007). 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 a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded in the financial statements.

11. Contractual Obligations

The nature of the Privy Council Office’s activities can result in large multi-year contracts and obligations whereby the Privy Council Office will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

	2009	2010	2011	2012	2013 and thereafter	Total
	(in thousands of dollars)
Privy Council Office
Transport and telecommunications	272	4	-	-	-	276
Information	827	-	-	-	-	827
Professional and special services	3,246	68	-	-	-	3,314
Rental	818	546	413	314	183	2,274
Purchased repair and maintenance	111	59	58	-	-	228
Utilities, materials and equipment	45	-	-	-	-	45
Acquisition of machinery and equipment	81	-	-	-	-	81
	5,400	677	471	314	183	7,045
Commissions of Inquiry
Transport and telecommunications	16	-	-	-	-	16
Information	316	-	-	-	-	316
Professional and special services	2,370	-	-	-	-	2,370
Rental	272	22	-	-	-	294
Utilities, materials and equipment	2	-	-	-	-	2
Transfer payments	64	-	-	-	-	64
	3,040	22				3,062
Total	8,440	699	471	314	183	10,107

12. Related Party Transactions

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

Services provided without charge: During the year, the Privy Council Office received, without charge from other government departments, accommodation, legal fees, the employer’s contribution to the health and dental insurance plans and worker’s compensation coverage. These services without charge have been recognized in the Privy Council Office’s Statement of Operations as follows:

	2008		2007
	(in thousands of dollars)
Accommodation	10,849		10,847
Employer’s contribution to the health and dental insurance plans	6,160		6,007
Legal services	469		1,232
Worker’s compensation coverage	11		11
Total	17,489		18,097

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, and audit services provided by the Office of the Auditor General, are not included as an expense in the Privy Council Office’s Statement of Operations.

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