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Treasury Board of Canada Secretariat
Financial Statements (Unaudited)
For the Year Ended March 31, 2012

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, 2012, and all information contained in these statements rests with the management of the Treasury Board of Canada 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, 2012 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. The 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.

The original version was signed by:

Statement of Financial Position (Unaudited)
As at March 31

	2012	2011 Restated (note 13)
	(in thousands of dollars)
Contractual obligations (note 8) Contingent liabilities (note 9) The accompanying notes form an integral part of these financial statements.
Liabilities
Accounts payable and accrued liabilities (note 4)	438,134	530,343
Vacation pay and compensatory leave	8,805	9,093
Employee future benefits (note 5)	24,377	39,030
Total liabilities	471,316	578,466
Financial assets
Due from Consolidated Revenue Fund	128,899	128,815
Accounts receivable and advances (note 6)	206,195	353,385
Total gross financial assets	335,094	482,200
Financial assets held on behalf of government
Accounts receivable and advances (note 6)	(4,891)	(1,965)
Total financial assets held on behalf of government	(4,891)	(1,965)
Total net financial assets	330,203	480,235
Departmental net debt	141,113	98,231
Non-financial assets
Prepaid expenses	81	58
Tangible capital assets (note 7)	8,745	15,242
Total non-financial assets	8,826	15,300
Departmental net financial position	(132,287)	(82,931)

The original version was signed by:  

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

	2012 Planned Results RestatedSee endnote 1* (note 2)	2012	2011 Restated (note 13)
	(in thousands of dollars)
Segmented information (note 12) The accompanying notes form an integral part of these financial statements. Return to endnote reference 1 * Planned results were presented in the 2011–12 future-oriented financial statements and included in the 2011–12 Report on Plans and Priorities (RPP), which are based on plans as at February 14, 2011 (see also note 2a).
Expenses
Government-Wide Funds and Public Service Employer Payments	2,388,305	2,126,950	1,904,123
Management Frameworks	79,204	75,528	71,415
People Management	71,546	74,872	73,571
Expenditure Management	39,972	52,424	33,519
Financial Management	36,171	30,766	31,410
Internal Services	90,947	101,195	105,260
Total Expenses	2,706,145	2,461,735	2,219,298
Revenues
Parking fees – Government-wide	8,965	7,544	10,672
Internal support services	8,016	8,016	12,493
Recovery of pension administration costs	7,800	5,356	5,495
Other	47	68	156
Revenues earned on behalf of government	(10,569)	(8,574)	(11,746)
Total revenues	14,259	12,410	17,070
Net cost from continuing operations	2,691,886	2,449,325	2,202,228
Transferred operations (note 11)
Expenses	76,388	7,717	67,046
Revenue	391	391	663
Net cost of transferred operations	75,997	7,326	66,383
Net cost of operations before government funding and transfers	2,767,883	2,456, 651	2,268,611
Government funding and transfers
Net cash provided by government	2,705,567	2,389,068	1,970,862
Change in due from Consolidated Revenue Fund	(41,552)	84	(101,933)
Services provided without charge by other government departments (note 10)	24,619	23,801	25,129
Transfer of assets and liabilities from (to) other government departments (note 7 and note 11)	0	(5,658)	129
Net cost of operations after government funding and transfers	79,249	49,356	374,424
Departmental net financial position – Beginning of year	(105,829)	(82,931)	291,493
Departmental net financial position – End of year	(185,078)	(132,287)	(82,931)

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

	2012 Planned ResultsSee endnote*	2012	2011
	(in thousands of dollars)
The accompanying notes form an integral part of these financial statements. Return to endnote reference * Planned results were presented in the 2011–12 future-oriented financial statements and included in the 2011–12 Report on Plans and Priorities (RPP), which are based on plans as at February 14, 2011 (see also note 2a).
Net cost of operations after government funding and transfers	79,249	49,356	374,424
Change due to tangible capital assets
Acquisition of tangible capital assets	922	3,110	3,693
Amortization of tangible capital assets	(3,830)	(2,983)	(3,302)
Proceeds from disposal of tangible capital assets	0	(23)	0
Gain on disposal of tangible capital assets	0	9	0
Transfer from (to) other government departments	0	(6,610)	129
Total change due to tangible capital assets	(2,908)	(6,497)	520
Change due to prepaid expenses	0	23	(6)
Net increase (decrease) in departmental net debt	76,341	42,882	374,938
Departmental net debt – Beginning of year	120,453	98,231	(276,707)
Departmental net debt – End of year	196,794	141,113	98,231

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

	2012	2011 Restated (note 13)
	(in thousands of dollars)
The accompanying notes form an integral part of these financial statements.
Operating activities
Net cost of operations before government funding and transfers	2,456,651	2,268,611
Non-cash items:
Amortization of tangible capital assets	(2,983)	(3,302)
Gain on disposal of tangible capital assets	9	0
Services provided without charge by other government departments (note 10)	(23,801)	(25,129)
Variations in Statement of Financial Position:
Decrease in accounts receivable and advances	(150,116)	(307,577)
Increase (decrease) in prepaid expenses	23	(6)
Decrease in accounts payable and accrued liabilities	92,209	36,432
Decrease in vacation pay and compensatory leave	288	1,044
Decrease (increase) in future employee benefits	14,653	(2,904)
Transfer of liabilities to other government departments (note 11)	(952)	0
Cash used in operating activities	2,385,981	1,967,169
Capital investing activities
Acquisitions of tangible capital assets	3,110	3,693
Proceeds from disposition of tangible capital assets	(23)	0
Cash used in capital investing activities	3,087	3,693
Net cash provided by the Government of Canada	2,389,068	1,970,862

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 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 areas of program activities:

a) Government-Wide Funds and Public Service Employer Payments

The Government-Wide Funds and Public Service Employer Payments program activity accounts for funds that are held centrally by the Secretariat to supplement other appropriations, and from which 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 employer of the core public administration.

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 Treasury Board's people management role is supported by the Secretariat's People Management program activity. The Secretariat provides analysis and recommendations to Treasury Board to ensure that deputy heads across government have the policies and guidance they need to manage all aspects of human resources within their departments and agencies. This program activity also includes the Secretariat's responsibilities for overseeing collective bargaining, labour relations, and pension and benefits plans.

d) Expenditure Management

Of all the Treasury Board's roles, the budget office is probably the best known. It is supported by two program activities: Expenditure Management and Financial Management. Through the Expenditure Management program activity, the Secretariat provides analysis and support to the President of the Treasury Board to report to Parliament, first on the funding estimated for government operations in a specific year and then on the amounts actually expended. The Expenditure Management program activity also includes the Secretariat's responsibility for managing public sector compensation (i.e., the costs of pay and benefits), as well as its role in reviewing, analyzing, and challenging departmental spending proposals to ensure a focus on results and values for Canadians.

e) Financial Management

The Financial Management program activity is the other aspect of the budget office function. Through this program activity, the Secretariat develops policies and guidance to ensure that the financial management community across government has the right direction to carry out its financial responsibilities. The quality of financial management across departments is important for maintaining the accuracy and integrity of the government's financial records and accounts. This program activity also includes the Secretariat's efforts to build capacity within the financial and audit communities, as well as its audit responsibilities.

f) Internal Services

The Secretariat must implement Treasury Board policies to ensure the smooth running of its internal operations. Efforts in this area are captured in the Internal Services program activity. These include support functions such as communications, financial and human resources management, real property, information technology, legal and procurement. These services support all the Secretariat's other program activities.

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 2011–12 Report on Plans and Priorities. The planned results amounts have been restated to reflect the revenue net of non-respendable amounts. This restatement resulted in a $10,569 thousands increase in net costs of operations before government funding and transfers. 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 departments of the government.

c) Amounts due from or to the Consolidated Revenue Funds

Amounts due from or to the Consolidated Revenue Funds (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 underlying transaction or event that gave rise to the revenue takes place.

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 in 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 expense 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 multi-employer pension plan sponsored by the Government of Canada. In its role as employer for the public service, employer contributions to the Plan for all departments and agencies, including additional contributions in respect of any actuarial deficiencies, are funded via centrally managed funds by the Secretariat and they are expensed in the year incurred. The Secretariat recovers a portion of the employer contributions to the Public Service Pension Plan from other departments and agencies.

Eligible employees of the Secretariat also participate in the Public Service Pension Plan, and the Secretariat's financial reporting responsibility in respect of its own employees' participation in the Plan is limited to its employer contributions.

The Government of Canada also sponsors a variety of other current and future employee benefit plans that the Secretariat is responsible to administer and/or fund through its centrally managed funds. Benefit payments for these plans are recognized as expenses 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, which 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 part 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 collect the full or remaining value of benefits on termination from the public service. As a result, the obligation related to those employee groups has ceased to accumulate.

g) Accounts receivable and advances

Accounts receivable and advances are stated at the lower of cost and 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 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
Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement

j) Measurement uncertainty

The preparation of these financial statements 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. 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 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 Authorities

The Secretariat receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through parliamentary authorities in a 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 current year authorities used

	2012	2011 Restated (note 13)
	(in thousands of dollars)
Net cost of operations before government funding and transfers	2,456,651	2,268,611
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets	(2,983)	(3,302)
Gain on disposal of tangible capital assets	9	0
Services provided without charge by other government departments	(23,801)	(25,129)
Decrease in vacation pay and compensatory leave	74	1,044
Decrease (increase) in employee future benefits	13,915	(2,904)
Refund of prior years' expenditures	62,742	10,711
Increase in accrued liabilities related to workforce adjustment costs	(8,095)	0
Other	2,857	1,634
Subtotal	44,718	(17,946)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	3,110	3,693
Proceeds from disposal of tangible capital assets	(23)	0
Decrease (increase) Advances	52	(378)
Subtotal	3,139	3,315
Current year authorities used	2,504,508	2,253,980

b) Authorities provided and used

	2012	2011
	(in thousands of dollars)
Authorities provided
Vote 1 — Operating expenditures	299,631	262,656
Vote 5 — Government contingencies	750,000	230,668
Vote 10 — Government-wide initiatives	8,511	6,563
Vote 20 — Public service insurance	2,380,408	2,223,794
Vote 25 — Operating budget carry-forward	8,061	128,041
Vote 30 — Pay list Requirements	361,781	175,324
Vote 33 — Capital budget carry-forward	241,899	0
Subtotal	4,050,291	3,027,046
Statutory authorities:
Contributions to employee benefit plans	32,073	30,466
Unallocated employer contributions made under the Public Service Superannuation Act and other retirement Acts, and the Employment Insurance Act	6,200	6,200
Payments for the pay equity settlement pursuant to section 30 of the Crown Liability and Proceedings Act	72	(470)
President of the Treasury Board - Salary and car allowance	78	78
Spending of proceeds from the disposal of surplus Crown assets	24	1
Subtotal	38,447	36,275
Less:
Lapsed authorities:
Vote 1 — Operating expenditures	(20,141)	(7,697)
Vote 5 — Government contingencies	(750,000)	(230,668)
Vote 10 — Government-wide initiatives	(8,511)	(6,563)
Vote 20 — Public service insurance	(193,813)	(261,047)
Vote 25 — Operating budget carry-forward	(8,061)	(128,041)
Vote 30 — Pay list Requirements	(361,781)	(175,324)
Vote 33 — Capital budget carry-forward	(241,899)	0
Spending of proceeds from the disposal of surplus crown assets	(24)	(1)
Subtotal	(1,584,230)	(809,341)
Current year authorities used	2,504,508	2,253,980

4. Accounts Payable and Accrued Liabilities

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

	2012	2011
	(in thousands of dollars)
Accounts payable to other government departments and agencies	289,031	340,182
Accounts payable to external parties	11,301	9,400
Subtotal	300,332	349,582
Accrued liabilities	137,802	180,761
Total accounts payable and accrued liabilities	438,134	530,343

In Canada's Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012–13. As a result, the department has recorded at March 31, 2012, an obligation for termination benefits for an amount of $8,095 thousand as part of accrued liabilities to reflect the estimated workforce adjustment costs.

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. 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/Québec Pension Plans benefits and they are indexed to inflation.

Employees and the Secretariat both contribute to the cost of the Plan. The 2011–12 employer expense amounts to $23,059 thousand ($21,387 thousand in 2010–11) in respect of its own employees, which represents approximately 1.8 times (1.9 times in 2010–11) the contributions by employees.

The Secretariat's financial reporting responsibility regarding the pension plan is limited to its contributions. Actuarial surpluses or deficiencies for the Secretariat and the whole of government are recognized in the financial statements of the Government of Canada, as the pension plan's 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:

	2012	2011
	(in thousands of dollars)
Accrued benefit obligation - Beginning of year	39,030	36,126
Transferred to other government departments, effective November 15, 2011 (note 11)	(738)	0
Subtotal	38,292	36,126
Expense for the year	5,005	6,676
Benefits paid during the year	(18,920)	(3,772)
Accrued benefit obligation - End of year	24,377	39,030

As part 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 to collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

6. Accounts Receivable and Advances

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

	2012	2011 Restated (note 13)
	(in thousands of dollars)
Receivables - Other government departments and agencies	200,200	350,669
Receivables - External parties	5,920	2,633
Advances to employees	71	78
Deposits in transit to the Receiver General	4	5
Gross accounts receivable and advances	206,195	353,385
Accounts receivable held on behalf of government	(4,891)	(1,965)
Net accounts receivable and advances	201,304	351,420

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. These receivables have decreased as a result of a reduced variance between planned benefits recovered during the year from other government departments and actual year end benefits expense.

The increase in receivables from external parties is largely due to a recoverable of the advance for the Public Service Dental Plan.

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	Acquisitions	Adjustments See endnote 2 *	Disposals and Write-Offs	Closing Balance	Opening Balance	Amortization	Adjustments See endnote 2 *	Disposals and Write-Offs	Closing Balance	2012	2011
	(in thousands of dollars)
Return to endnote reference 2 * The adjustments columns mainly include transfer of computer hardware, software, and machinery and equipment with a net book value of $6,221,561 (cost of $12,271,926) and of $409,783 (cost of $1,798,565) to Shared Services Canada and to the Department of Finance Canada respectively and a transfer of the President's motor vehicle from Industry Canada with a net book value of $21,190 (cost of $24,929).
Machinery and equipment	382	88	(78)	227	165	313	23	(32)	227	77	88	69
Motor vehicles	151	0	25	56	120	94	39	4	42	95	25	57
Leasehold improvements	1,952	0	0	0	1,952	1,952	0	0	0	1,952	0	0
Computer hardware	13,565	2,911	(13,716)	2,750	10	8,538	1,482	(7,260)	2,750	10	0	5,027
Computer software	14,661	111	(275)	317	14,810	4,572	1,439	(146)	317	5,548	8,632	10,089
Total	30,711	3,110	(14,044)	3,350	16,247	15,469	2,983	(7,434)	3,336	7,682	8,745	15,242

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/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

	2013	2014	2015	2016	2017 and thereafter	Total
	(in thousands of dollars)
Public Service Health/Dental Plans	40,446	31,178	32,523	35,373	21,224	160,744
Other professional services	13,443	80	80	80	65	13,748
Management consulting	1,195	47	0	0	0	1,242
Computer services	1,869	74	0	0	0	1,943
Total	56,953	31,379	32,603	35,453	21,289	177,677

Shared Services Canada's portion of contractual obligations for an amount of $2,319 thousand is not included in the above table. These contractual obligations were transferred to Shared Services Canada.

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 other for which no amount is specified. Claims for which the outcome is not determinable and a reasonable estimate can be made by management amount approximately to $65 billion ($65 billion in 2010–11) at March 31, 2012. 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. No accrual for these contingent liabilities has been made in these financial statements.

The most significant of these legal actions is described as follows:

In September 1999, the Public Sector Pension Investment Board Act (Bill C-78) was passed by Parliament, providing for improvements in the financial management of federal public service pension plans, including the Public Service (PSSA), RCMP (RCMPSA), and Canadian Forces (CFSA) superannuation plans. The new Act authorized the President of the Treasury Board to debit the accounts in order to reduce the amount of certain excess balances in the superannuation accounts. In late 1999, the major public service unions and pensioner associations launched three lawsuits against the Crown challenging the validity of the legislation. On November 20, 2007, the plaintiffs' actions were dismissed. In February 2008, all three plaintiffs appealed the decisions to the Ontario Court of Appeal. The appeal was heard in April 2010. On October 8, 2010, the Ontario Court of Appeal dismissed the plaintiffs' appeal. The plaintiffs applied for leave to appeal to the Supreme Court of Canada which granted leave to appeal on May 5, 2011. The hearing was held on February 9, 2012 and the judgment is yet to be delivered.

10. Related-Party Transactions

The Secretariat is related as a result of common ownership to all Government 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 on behalf of other government departments, and fund the employer's contribution to the Public Health and Dental insurance plans through its centrally managed funds. During the year, the Secretariat received and provided common services as disclosed below.

a) Common services provided without charge by other government departments

During the year, the Secretariat received services without charge from certain common service organizations, 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:

	2012	2011
	(in thousands of dollars)
Accommodation	20,294	19,734
Legal services	3,507	5,395
Total	23,801	25,129

The government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. 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 costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada are not included in the department'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, related to the provision of the employer's contribution to the health, dental and other employee insurance plans and payroll benefits in the amount of $1,690,387 thousand in 2011–12 (compared with $1,643,251 thousand in 2010–11).

Other transactions with related parties

	2012	2011
	(in thousands of dollars)
Expenses – Other government departments and agencies	24,808	23,423
Revenues – Other government departments and agencies	13,372	17,988

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 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 and to National Defence. The transfer of these programs is the result of the 2008 Human Resources Agency Horizontal Strategic Review including Public Service Employer Payments.

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

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

In addition, the 2011 comparative figures have been reclassified on the Statement of Operations and Departmental Net Financial Position to present the revenues and expenses of the transferred operations related to Shared Services Canada, and the transfer to Foreign Affairs and International Trade Canada and to National Defence the management of pension insurance and the social security program for locally engaged staff.

During the transition period, the Secretariat continued to administer the transferred activities on behalf of Shared Services Canada. The administered expenses and revenues amounted to $4,898 thousand and to $316 thousand respectively, for the period from November 15, to March 31, 2012. These expenses and revenues are not recorded in these financial statements.

12. Segmented information

a) Presentation by segment is based on the Secretariat's program alignment architecture. The presentation by segment is based on the same accounting policies as described in the summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main program activities, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

	GF & PSEP	MF	PM	EM	FM	IS	2012 total	2011 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	252	0	0	200	0	452	253
Total transfer payment	0	252	0	0	200	0	452	253
Operating Expenses
Government-wide funds and publics ervice employer payments	2,126,950	0	0	0	0	0	2,126,950	1,904,123
Salary and employee benefits	0	60,486	54,724	31,182	20,940	63,475	230,807	219,896
Professional and special services	0	8,311	10,260	17,993	7,258	20,461	64,283	55,408
Accommodation	0	4,668	4,668	2,434	1,624	6,900	20,294	19,734
Transport and telecommunications	0	664	945	128	250	864	2,851	3,615
Machinery, equipment, parts and tools	0	410	406	410	247	5,160	6,633	2,632
Repair and maintenance	0	71	74	15	6	1,167	1,333	2,517
Utilities, materiel and supplies	0	229	274	102	123	552	1,280	3,335
Information	0	93	99	82	20	305	599	784
Rentals	0	113	289	54	86	403	945	1,175
Amortization	0	19	11	0	0	1,610	1,640	1,825
Other Expenses	0	212	3,122	24	12	298	3,668	4,001
Total Operating Expenses	2,126,950	75,276	74,872	52,424	30,566	101,195	2,461,283	2,219,045
Total expenses	2,126,950	72,528	74,872	52,424	30,766	101,195	2,461,735	2,219,298
Revenues
Parking fees – Government-wide	7,544	0	0	0	0	0	7,544	10,672
Internal support services	0	0	0	0	0	8,016	8,016	12,493
Recovery of pension administration costs	0	0	5,356	0	0	0	5,356	5,495
Other Revenue	45	0	2	0	0	21	68	156
Revenues earned on behalf of government	(7,589)	0	(983)	0	0	(2)	(8,574)	(11,746)
Total Revenues	0	0	4,375	0	0	8,035	12,410	17,070
Net cost from continuing operations	2,126,950	75,528	70,497	52,424	30,766	93,160	2,449,325	2,202,228

b) Centrally Managed Funds

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/Québec Pension Plan contributions and Employment Insurance premiums;
• the employer's share of health, disability, and life insurance premiums and related Quebec sales tax;
• the 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;
• 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/Québec 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 8.5 per cent (8.5 per cent in 2010–11) of salaries and wages incurred.

A breakdown by major category is as follows:

	2012	2011
	(in thousands of dollars)
Public Service Pension Plan and Retirement Compensation Arrangement contributions (Statutory)	2,682,048	2,669,956
Public Service Health Care Plan (Vote 20)	906,252	865,819
Canada/Québec Pension Plan contributions (Statutory)	659,944	634,762
Provincial payroll taxes (Vote 20)	535,107	509,187
Group disability and life insurance (Vote 20)	610,817	432,887
Employment Insurance premiums (Statutory)	285,759	272,083
Public Service Dental Care Plan (Vote 20)	279,270	258,821
Pensioners' Dental Services Plan (Vote 20)	136,980	129,135
Pension and other government employee benefits in respect of locally engaged staff employed in Canadian missions abroad (Vote 20)	106	55,646
Provincial health insurance plan premiums (Vote 20)	33,576	31,452
Québec Parental Insurance Plan premiums (Vote 20)	35,484	32,181
Public Service Death Benefit Account contributions (Statutory)	12,753	12,083
Public Service Pension Plan and Retirement Compensation Arrangement contributions in respect of actuarial deficits (Statutory)	6,200	6,200
Operating expenses (Vote 20)	3,375	5,627
Pension and similar payments to former government employees (Vote 20 and Statutory)	3,684	3,626
Employment Insurance premium reduction (Vote 20)	2,092	1,645
Miscellaneous special payments (Statutory)	72	(470)
Total Expenses	6,193,519	5,920,640
Recoveries
Employer's contributions to government employee benefit plans recovered from government departments and agencies (Statutory)	3,640,503	3,588,885
Employer's contributions to government employee insurance plans recovered from government departments and agencies (Vote 20)	184,421	174,059
Employee's contributions to the Public Service Health Care Plan recovered from government departments and other organizations (Vote 20)	171,806	136,419
Pensioners' contributions to the Pensioners' Dental Services Plan (Vote 20)	69,733	61,508
Total Recoveries	4,066,463	3,960,871
Net Expenses before reclassified activities	2,127,056	1,959,769
Less: Reclassified activities (note11)	106	55,646
Net Expenses after reclassified activities	2,126,950	1,904,123

13. Accounting Changes

During 2011, amendments were made to Treasury Board Accounting Standard 1.2 – Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments are effective for financial reporting of fiscal years ending March 31, 2012, and later. The significant changes to the Secretariat's financial statements are described below. These changes have been applied retroactively, and comparative information for 2010–11 has been restated.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, the Secretariat now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Revenue and related accounts receivable are now presented net of non-respendable amounts in the Statement of Operations and Departmental Net Financial Position and Statement of Financial Position. The effect of this change was to increase the net cost of operations before government funding and transfers by $8,574 thousand for 2012 ($11,746 thousand for 2011) and decrease total financial assets by $4,891 thousand for 2012 ($1,965 thousand for 2011).

Government funding and transfers, as well as the credit related to services provided without charge by other government departments are now recognized in the Statement of Operations and Departmental Net Financial Position below “net cost of operations before government funding and transfers.” In previous years, the Secretariat recognized these transactions directly in the Statement of Equity of Canada. The effect of this change was to decrease the net cost of operations after government funding and transfers by $2,407,295 thousand for 2012 ($1,894,187 thousand for 2011).

14. Comparative Information

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