Financial Statements - March 31, 2011

Statement of Management Responsibility Including Internal Control over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements of the Public Service Commission (PSC) for the year ended March 31, 2011 and all information contained in these statements rests with PSC’s management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies, which are based on 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 PSC's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the PSC'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 PSC; and through conducting an annual assessment of the effectiveness of the system of internal control over financial reporting (ICFR).

An assessment for the year ended March 31, 2011 was completed in accordance with the Policy on Internal Control and the results and action plans are summarized in the annex. The system of ICFR is designed to mitigate risk to a reasonable level and may not prevent or detect misstatements. It is based on an on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

The effectiveness and adequacy of the PSC’s system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the PSC's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the President of the PSC.

The Office of the Auditor General, the independent auditor for the Government of Canada, has expressed an opinion on the fair presentation of the financial statements of PSC which does not include an audit opinion on the annual assessment of the effectiveness of PSC’s internal controls over financial reporting.

Anne-Marie Robinson
President, Public Service Commission

Omer Boudreau
Chief Financial Officer
Vice-President, Corporate Management

Ottawa, Canada
September 3, 2013

 

Statement of Financial Position
As at March 31
(in thousands of dollars)
  2011 2010
Assets
Financial assets
Due from the Consolidated Revenue Fund 3,822 5,163
Accounts receivable and advances (Note 4) 1,123 953
  4,945 6,116
Non-financial assets
Prepaid expenses 614 601
Tangible capital assets (Note 5) 15,072 17,449
  15,686 18,050
Total assets 20,631 24,166
Liabilities
Lease obligation for tangible capital assets (Note 6) 18 18
Accrued salary 1,855 1,837
Accrued vacation leave 3,652 3,847
Accounts payable and accrued liabilities (Note 7) 3,194 6,251
Employee future benefits (Note 8) 17,367 17,396
  26,086 29,349
Equity of Canada (Note 9) (5,455) (5,183)
Total liabilities and Equity of Canada 20,631 24,166

Contingent liabilities (Note 10)
Contractual obligation (Note 11)

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

Statement of Operations
For the year ended March 31
(in thousands of dollars)
  2011 2010
Expenses (Note 12)
Staffing services and assessment
Staffing services 25,414 28,716
Assessment 22,735 27,273
  48,149 55,989
Oversight of integrity of staffing and political neutrality
Audits, evaluation and studies 18,713 16,663
Investigations and early intervention mechanisms 4,181 4,351
Monitoring 3,222 3,428
  26,116 24,442
Appointment integrity and political neutrality
Policy, regulation and exclusion approval orders 6,532 6,695
Non-delegated authorities 3,176 2,601
Delegated appointment authorities 2,945 2,835
Political activities 1,099 1,238
  13,752 13,369
Internal services
Resource management services 27,804 28,017
Governance and management support 14,316 13,015
Asset management services 2,810 3,173
  44,930 44,205
total expenses 132,947 138,005
Revenues
Assessment and counselling services and products 12,095 12,399
Activities on behalf of:
Canada School of Public Service 41 53
Less: Costs recovered (41) (53)
Net cost of operations 120,852 125,606

The accompanying notes form an integral part of these financial statements

 

Statement of Equity of Canada
For the year ended March 31
(in thousands of dollars)
  2011
2010
Equity of Canada, beginning of year (5,183) (2,111)
Net cost of operations (120,852) (125,606)
Net cash provided by Government of Canada 102,445 108,698
Change in Due from the Consolidated Revenue Fund (1,341) (4,894)
Services provided without charge from other government departments and agencies (Note 14) 19,476 18,730
Equity of Canada, end of year (5,455) (5,183)

The accompanying notes form an integral part of these financial statements

 

Statement of Cash Flows
For the year ended March 31
(in thousands of dollars)
  2011 2010
Operating activities
Cash received from:
Assessment and counselling services and products 11,938 13,091
Cash paid for:
Salaries and employee benefits 92,872 95,980
Professional and special services 10,571 13,491
Transportation and telecommunications 2,304 2,784
Repair and maintenance 2,633 1,565
Informatics, office equipment, furniture and fixtures 1,710 2,573
Rentals 1,015 830
Utilities, materials and supplies, and other payments 713 537
Printing and publications services 451 721
  112,269 118,481
Cash used in operating activities 100,331 105,390
Capital investment activities
Acquisitions of tangible capital assets 2,108 3,304
Proceeds from disposal of tangible capital assets - -
Cash used in capital investment activities 2,108 3,304
Financing Activities
Lease payments for tangible capital assets 6 4
Cash used in financing activities 6 4
Net cash provided by Government of Canada 102,445 108,698

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

Notes to the Financial Statements

For the year ended March 31,2011

1. Authority and objectives

The Public Service Commission (PSC) is an independent agency established under the Public Service Employment Act (PSEA) and listed in schedules 1.1 and IV of the Financial Administration Act (FAA). It is dedicated to building a public service that strives for excellence by protecting merit, non-partisanship, and representativeness of Canadian society and the use of both official languages. This responsibility is performed in the best interests of the public service as part of Canada’s governance system, by administering and applying the provisions of the PSEA and by carrying out responsibilities as provided for in the Employment Equity Act and the Official Languages Act. The current PSEA came into force in December 2005. This legislation emphasizes the PSC’s accountability to Parliament and provides authority to the PSC to delegate staffing authority to deputy heads who in turn are accountable to the PSC for exercising this power. The PSC also carries out audits and investigations and administers measures under the PSEA regarding political activities of public servants.

The PSC, from its head office in Ottawa and its seven regional offices, offers recruitment services that allow talented Canadians, drawn from across the country, to join the public service and continually renews staffing services to meet the needs of a modern and innovative public service. The PSC has four program activities that contribute to the achievement of its objectives:

The Appointment Integrity and Political Neutrality activity develops and maintains a policy and regulatory framework for safeguarding the integrity of public service staffing and ensuring political neutrality. This activity includes establishing policies and standards, providing advice, interpretation and guidance, administering delegated and non-delegated appointment authorities, and allowing exceptions as appropriate.

The Oversight of Integrity in Staffing and Political Neutrality activity provides an accountability regime for the implementation of the appointment policy and regulatory framework for safeguarding the integrity of public service staffing and ensuring political neutrality. This activity includes monitoring departments’ and agencies’ compliance with legislative requirements, conducting audits, studies and evaluations, carrying out investigations, and reporting to Parliament on the integrity of public service staffing.

The Staffing Services and Assessment activity develops and maintains systems that link Canadians and public servants seeking employment opportunities in the federal public service with hiring departments and agencies. It provides assessment-related products and services in the form of research and development, consultation, assessment operations and counselling for use in recruitment, selection and development throughout the federal public service. This activity also includes delivering staffing services, programs and products to departments and agencies, to Canadians and public servants, through client service units located across Canada.

The Internal Services activity represents a group of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These activities include: Communications and Parliamentary Affairs; Corporate Management Practices and Evaluation; Human Resources Management; Finance and Administration; Information Technology Services; and Internal Audit. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Summary of significant accounting policies

These financial statements have been prepared in accordance with the Treasury Board accounting policies stated below, which are based on Canadian generally accepted accounting principles for the public sector. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian generally accepted accounting principles, except as disclosed in Note 15 – Net Debt Indicator.

a. Parliamentary authorities

The PSC is financed by the Government of Canada through Parliamentary appropriations. Financial reporting of authorities provided to the PSC do not parallel financial reporting according to Canadian generally accepted accounting principles for the public sector 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 reconciliation between the basis of reporting.

b. Net cash provided by the Government

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

Amounts due from/to the 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 PSC is entitled to draw from the CRF without further appropriations to discharge its liabilities.

d. Accounts receivable

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

e. Tangible capital assets

All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. Similar items under $5,000 are expensed in the Statement of Operations. The cost of assets under development by the PSC includes material, direct labour and related overhead. Amounts included in assets under development are transferred to the appropriate class of asset upon completion, and are then amortized. 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
Office equipment 3 and 10 years
Informatics hardware and infrastructure 4 and 5 years
Computer software 3 years
In-house developed software Lesser of 12 years and useful life
Furniture and fixtures 15 years
Vehicles 6 years
Leasehold improvements Lesser of 10 years and term of lease
Leased equipment Lesser of term of lease/useful life

f. Salaries and benefits, and vacation leave

Salaries and vacation leave are expensed as the salary and leave accrue to employees under their respective terms of employment. The employee’s accrued salaries and benefits liability is calculated based on the respective terms of employment using the employees' salary levels at year end, and the number of days remaining unpaid at the end of the year. The liability for vacation leave is calculated at the salary levels in effect at March 31st for all unused vacation leave benefits accruing to employees. Employee vacation pay liabilities payable on cessation of employment represent obligations of the PSC that are normally funded through future years’ appropriations.

g. Employee future benefits

i. Pension benefits

The PSC’s eligible employees participate in the Public Service Pension Plan administered by the Government of Canada. The PSC’s contributions to the Plan are charged to expenses in the year incurred and represent the total pension obligation of the PSC. The PSC is not required under current legislation to make contributions with respect to any actuarial deficiencies of the Plan.

ii. 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.

iii. Other benefits
The Government of Canada sponsors a variety of other benefit plans, which cover the employees of the PSC. These include health care, dental and insurance plans for which no costs are charged to the PSC. In these cases, an estimated cost is recorded as an operating expense under the item “Services provided without charge”. The Government of Canada also sponsors workers’ compensation benefits available across Canada. The PSC is charged for its share of the annual benefit payments incurred under this Plan. These amounts represent the PSC’s contribution to the Plan and they are recorded by the PSC as an expense in the period incurred. As a participant, the PSC has no other obligation to any of these plans in addition to its annual contributions.

h. Revenues

Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenues takes place. The PSC currently has a net voting authority for the provision of some of its services. This gives the PSC the authority to respend revenues received in a fiscal year to offset expenditures incurred in that fiscal year arising from the provision of assessment and counselling services and products.

i. Services provided without charge

Services provided without charge from other federal government departments and agencies are recorded as operating expenses at their estimated cost. A corresponding amount is reported directly in the Statement of Equity of Canada.

j. Measurement uncertainty

The preparation of these financial statements in accordance with Treasury Board accounting policies requires management to make estimates and assumptions that affect 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 severance benefits and the estimated 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 PSC 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 PSC 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:

(in thousands of dollars)
  2011 2010
Net cost of operations 120,852 125,606
Adjustments for items affecting net cost of operations but not affecting appropriations:
Services provided without charge (19,476) (18,730)
Amortization of tangible capital assets (4,483) (7,178)
Revenue not available for spending 1,596 1,671
Decrease in employee future benefits 29 1,878
Decrease (increase) in vacation leave 195 (217)
Other 136 217
  98,849 103,247
Adjustments for items not affecting net cost of operations but affecting appropriations:
Acquisitions of tangible capital assets 2,108 3,304
Decrease in lease obligations for tangible capital assets 6 4
Increase in prepaid expenses 13 213
  2,127 3,521
Current year appropriations used 100,976 106,768

(b) Authorities provided and used:

(in thousands of dollars)
  2011 2010
Parliamentary appropriations provided:
Vote 105 - Operating expenditures 91,629 98,833
Statutory contributions to employee benefit plans 13,340 13,958
Spending of proceeds from disposal of surplus assets 1 1
Refund of previous year revenue 53 126
  105,023 112,918
Less: Lapsed appropriations - operating expenditures (4,047) (6,150)
Current year appropriations used 100,976 106,768

4. Accounts receivable and advances

(in thousands of dollars)
  2011 2010
Receivables - Federal government departments, agencies and crown corporations 1,067 910
Receivables - External parties 50 37
Advances to PSC’s Employees 6 6
Total 1,123 953

5. Tangible capital assets

(in thousands of dollars)
  2011 2010
Cost
  March 31,
2010
Acquisitions Disposals,
write-offs
Transfers March 31,
2011
Net book
value
Net book
value
Office equipment 699 5 (86) - 618 248 298
Informatics hardware and infrastructure 9,016 650 (1,507) - 8,159 2,153 2,571
Software 29,966 108 (187) 415 30,302 8,953 11,595
Furniture and fixtures 1,465 - - - 1,465 1,047 1,129
Vehicles 30 - - - 30 20 24
Leasehold improvements 1,157 - - - 1,157 642 757
Assets under development 1,055 1,345 - (415) 1,985 1,985 1,055
Sub-Total 43,388 2,108 (1,780) - 43,716 15,048 17,429
Leased equipment 22 6 - - 28 24 20
Total 43,410 2,114 (1,780) - 43,744 15,072 17,449

 

(in thousands of dollars)
  2011
Accumulated amortization
 
  March 31,
2010
Amortization Disposals,
write-offs
March 31,
2011
Office equipment 401 47 (78) 370
Informatics hardware and infrastructure 6,445 1,068 (1,507) 6,006
Software 18,371 3,165 (187) 21,349
Furniture and fixtures 336 82 - 418
Vehicles 6 4 - 10
Leasehold improvements 400 115 - 515
Sub-Total 25,959 4,481 (1,772) 28,668
Leased equipment 2 2 - 4
Total 25,961 4,483 (1,772) 28,672

6. Lease obligation for tangible capital assets

The PSC has entered into agreements for photocopier rentals under capital lease with a cost of $27,800 and accumulated amortization of $4,187 as at March 31, 2011 ($22,000 and $2,000 at March 31, 2010). The obligations for the upcoming years include the following:

(in thousands of dollars)
  2011 2010
2012 7 4
2013 7 5
2014 5 5
2015 and thereafter 0 5
Total future minimum lease payment 19 19
Less: imputed interest (2.12% to 3.01%) (1) (1)
Balance of obligations under leased tangible capital assets 18 18

7. Accounts payable and accrued liabilities

(in thousands of dollars)
  2011 2010
Federal government departments, agencies and crown corporations 489 3,057
External parties 2,705 3,194
Total 3,194 6,251

8. Employee future benefits

a. Pension benefits

The PSC eligible 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 the Canada and Quebec Pension Plan benefits and they are indexed to inflation.

Both the employees and the PSC contribute to the cost of the Plan. The 2010-2011 expense amounts to $9,364,000 ($10,077,000 in 2009-2010), which represents approximately 1.9 times the employees’ contributions.

The PSC'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.

b. Employee severance benefits

The PSC 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:

(in thousands of dollars)
  2011 2010
Accrued benefit obligation, beginning of year 17,396 19,274
Expense for the year 1,717 140
Benefits paid during the year (1,746) (2,018)
Accrued benefit obligation, end of year 17,367 17,396

9. Equity of Canada

The deficit represents liabilities incurred by the PSC, net of assets, which have not yet been funded through appropriations. Significant components of this amount are employee future benefits and vacation pay liabilities. These amounts are expected to be funded by appropriations in future years as they are paid.

10. Contingent liabilities

Claims are made against the PSC in the normal course of operations. There are currently claims outstanding at March 31, 2011, none of which are expected to result in payment.($0 at March 31, 2010)

11. Contractual obligations

The nature of the PSC's activities can result in some large multi-year obligations whereby the PSC will be obligated to make future payments when the services are received. Significant contractual obligations other than the lease obligation for tangible capital assets that can be reasonably estimated are summarized as follows:

(in thousands of dollars)
  2012 2013 2014 2015 and
thereafter
Total
Service contracts 2,633 347 245 19 3,244
Operating leases 121 84 39 1 245
Total 2,754 431 284 20 3,489

12. Segmented information

(in thousands of dollars)
  2011 2010
  Staffing
services and
assessment
Oversight of
integrity of
staffing and
political
neutrality
Appointment
integrity and
political
neutrality
Internal
services
Total Total
Salaries and employee benefits 36,154 21,166 11,613 28,720 97,653 98,062
Professional and special services 3,337 1,658 710 5,745 11,450 13,556
Accommodation 4,119 2,237 1,178 3,848 11,382 10,547
Amortization of tangible capital assets 2,015 203 7 2,258 4,483 7,178
Transportation and telecommunications 1,138 262 136 797 2,333 2,729
Repair and maintenance 666 178 4 1,007 1,855 2,037
Informatics, office equipment, furniture and fixtures 139 341 2 1,007 1,559 1,698
Utilities, materials and supplies and other payments 243 27 51 439 760 851
Rentals 156 25 29 807 1,017 825
Printing and publications services 182 19 22 232 455 522
Total 48,149 26,116 13,752 44,930 132,947 138,005

13. Related party transactions

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

During 2010-2011, the PSC incurred expenses of $38,718,000 ($39,274,000 in 2009-2010) and earned revenues of $12,083,000 ($12,385,000 in 2009-2010) from transactions in the normal course of business with other federal government departments, agencies and Crown corporations. These expenses include services received without charge as described in Note 14.

14. Services provided without charge

During the year, the PSC received services that were obtained without charge from other government departments and agencies. These services without charge have been recognized in the PSC's Statement of Operations as follows:

(in thousands of dollars)
  2011 2010
Public Works and Government Services Canada - Accommodation 11,382 10,547
Treasury Board Secretariat - employer's share of insurance premiums 6,714 6,904
Justice Canada - Legal services 1,137 1,039
Human Resources and Skills Development Canada - employer's portion of Worker's compensation payments 133 133
Office of the Auditor General of Canada - audit services 110 107
Total 19,476 18,730

15. Net Debt Indicator

The presentation of the net debt indicator and a statement of change in net debt is required under Canadian generally accepted accounting principles.

Net debt is the difference between a government’s liabilities and its financial assets and is meant to provide a measure of the future revenues required to pay for past transactions and events. A statement of change in net debt would show changes during the period in components such as tangible capital assets, prepaid expenses and inventories. The PSC is financed by the Government of Canada through appropriations and operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by PSC is deposited to the CRF and all cash disbursements made by PSC are paid by the CRF. Under this government business model, assets reflected on the PSC’s financial statements, with the exception of the Due from the CRF, are not available to use for the purpose of discharging the existing liabilities of the PSC. Future appropriations and any respendable revenues generated by PSC’s operations would be used to discharge existing liabilities.

(in thousands of dollars)
  2011 2010
Liabilities
Accounts payable and accrued liabilities 3,194 6,251
Accrued salary 1,855 1,837
Accrued vacation leave 3,652 3,847
Employee future benefits 17,367 17,396
Lease obligation for tangible capital assets 18 18
Total Financial Liabilities 26,086 29,349
Financial Assets
Due from Consolidated Revenue Fund 3,822 5,163
Accounts receivable and advances 1,123 953
Total Financial Assets 4,945 6,116
Net Debt Indicator 21,141 23,233

16. Comparative information

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