Future-Oriented Financial Statements
March 31, 2013

Public Service Commission

Table of Contents

Statement of Management Responsibility

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial information for the year ending March 31, 2013 rests with departmental management. The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted for Part III of Estimates (Report on Plans and Priorities), and will be used in the PSC's Departmental Performance Report to compare with actual results.

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

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented and the variations may be material.

Anne-Marie Robinson
President, Public Service Commission

Omer Boudreau
Chief Financial Officer
Vice-President, Corporate Management

Ottawa, Canada
March 19, 2012

Future Oriented Statement of Financial Position

At March 31, 2012 (in thousands of dollars)
  Estimated Results 2012 Planned Results 2013
Assets
Financial assets
Due from the Consolidated Revenue Fund 3,711 3,714
Accounts receivable and advances ( Note 6) 1,410 1,162
Total financial assets 5,121 4,876
 
Non-financial assets
Prepaid expenses 534 583
Tangible capital assets ( Note 7) 11,323 8,456
Total non-financial assets 11,857 9,039
Total assets 16,978 13,915
 
Liabilities
Accounts payable and accrued liabilities ( Note 8) 5,457 4,967
Accrued salary 673 893
Vacation pay and compensatory leave 3,710 3,736
Lease obligation for tangible capital assets ( Note 9) 17 9
Employee future benefits ( Note 10) 10,965 9,762
Total Liabilities 20,822 19,367
Equity of Canada ( Note 11) (3,844) (5,452)
Total liabilities and equity of Canada 16,978 13,915

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

Contingent liabilities (Note 12)

Contractual obligations (Note 13)

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

Due to rounding, figures may not add up to totals shown.

Future-Oriented Statement of Operations

For the year ending March 31, 2012 (in thousands of dollars)
  Estimated Results 2012 Planned Results 2013
Expenses ( Note 16)
Staffing and Assessment Services
Staffing Services 25,660 14,916
Assessment 26,374 26,873
Public Service Resourcing System - 8,287
Total Staffing and Assessment Services 52,034 50,076
Oversight of Integrity in Staffing & Non-Partisanship
Monitoring 2,710 2,619
Audits and Data Services 17,326 18,003
Investigations 3,692 3,416
Total Oversight of Integrity in Staffing & Non-Partisanship 23,728 24,038
Appointment Integrity and Political Impartiality
Appointment Policies, Guidance and Political Activities 8,861 9,360
Delegated & Non-delegated Appointment Authorities 7,154 5,980
Total Appointment Integrity and Political Impartiality 16,015 15,340
Internal Services
Governance & Management Support 14,302 12,693
Resource Management Services 29,011 22,208
Asset Management Services 3,248 3,037
Total Internal Services 46,561 37,938
Total expenses 138,338 127,392
Revenues
Assessment and counselling services and products 12,001 16,081
Net cost of operations 126,337 111,311

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

Segmented information (Note 16)

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

Due to rounding, figures may not add up to totals shown.

Future-Oriented Statement of Equity of Canada

For the year ending March 31, 2012 (in thousands of dollars)
  Estimated Results 2012 Planned Results 2013
Equity of Canada, beginning of year (5,456) (3,844)
Net cost of operations (126,337) (111,311)
Net cash provided by Government 107,796 90,758
Change in due from the Consolidated Revenue Fund (111) 3
Services provided without charge by other government departments ( Note 15) 20,226 18,939
Equity of Canada, end of year (3,844) (5,452)

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2001 to December 31, 2011.

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

Due to rounding, figures may not add up to totals shown.

Future-Oriented Statement of Cash Flow

For the year ending March 31, 2012 (in thousands of dollars)
  Estimated Results 2012 Planned Results 2013
Operating activities
Cash received from:
Assessment and counselling services and products 11,812 16,238
 
Cash paid for:
Salaries and employee benefits 101,587 91,206
Professional and special services 10,533 9,293
Transportation and telecommunications 2,673 2,084
Informatics, office equipment, furniture and fixtures 33 364
Repair and maintenance 1,540 1,627
Utilities, materials and supplies, and other payments 837 759
Printing and publications services 478 403
Rentals 767 630
Total Operating activities 118,448 106,366
Cash used in operating activities 106,636 90,128
Capital investment activities
Acquisitions of tangible capital assets 1,158 622
Cash used by capital investment activities 1,158 622
Financing Activities
Decrease in lease obligations for tangible capital assets 1 8
Cash used in financing activities 1 8
Net cash provided by Government of Canada 107,795 90,758

Information for the year ended March 31, 2012 includes actual amounts from April 1, 2011 to December 31, 2011.

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

Due to rounding, figures may not add up to totals shown.

Notes to Future-Oriented Financial Statements

1. Authority and objectives

The Public Service Commission (PSC) of Canada 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). The PSC is dedicated to building a public service that strives for excellence by protecting merit, non-partisanship, 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 PSEA came into force in December 2005. This legislation emphasizes the PSC’s accountability to Parliament and delegates staffing authority to deputy heads who in turn are accountable to the PSC for exercising this power. The Commission also carries out audits and investigations and administers measures under the new PSEA regarding political activities of public servants.

The PSC, from its offices 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 Staffing and Assessment Services activity develops and maintains the 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 Oversight of Integrity in Staffing and Non-Partisanship 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 staffing is free from political influence. This activity includes monitoring departments’ and agencies’ staffing performance and compliance with legislative requirements; conducting audits and studies; carrying out investigations; and reporting to Parliament on the integrity of public service staffing.
  • The Appointment Integrity and Political Impartiality activity is focused on independently safeguarding merit and non-partisanship in the federal public service. This activity includes developing and advancing strategic policy positions and directions, conducting policy research, establishing PSC policies and standards, providing advice, interpretation and guidance, and administering delegated and non-delegated authorities.
  • Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services, Material Services, Acquisition Services; and Travel and Other Administration Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Methodology and significant assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the PSC as described in the Report on Plans and Priorities.

The main assumptions are as follows:

  1. The PSC's activities will remain substantially the same, with the exception of information technology related activities transferred to Shared Services Canada.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience.
  3. Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.
  4. Estimated year end information for 2011-12 is used as the opening position for the 2012-13 planned results.

These assumptions are adopted as at March 19, 2012.

3. Variation and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of 2011-2012 and for 2012-2013, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements the Public Service Commission has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

  1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
  2. Implementation of new collective agreements.
  3. Economic conditions may affect both the amount of revenue earned and the collectability of loan receivables.
  4. Interest rates in effect at the time of issue will affect the net present value of non-interest bearing loans.
  5. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, Public Service Commission will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The future-oriented financial statements have been prepared in accordance with the Treasury Board accounting policies in effect for the 2012-13 fiscal year. These accounting policies, stated below, 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.

Significant accounting policies are as follows:

  1. Parliamentary authorities – The PSC is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the PSC 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 future-oriented statement of operations and the future-oriented statement of financial position are not necessarily the same as those provided through authorities from Parliament. Note 5 provides a reconciliation between the bases of reporting.
  2. Net cash provided by 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.
  3. 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 parliamentary expenditure authorities to discharge its liabilities.
  4. Revenues are recorded on an accrual basis. Revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenues occurred. Forecast revenues reflect the total authority for the year including revenue not available for spending.
  5. Expenses are recorded on an accrual basis. Vacation pay and compensatory leave are accrued as the benefits are earned under the 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 and other services are reported as operating expenses at their estimated cost.
  6. Employee future benefits

    1. Pension benefits: Eligible employees of the PSC 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 departmental obligation to the Plan. Current legislation does not require the PSC to make contributions for any actuarial deficiencies of the Plan.
    2. 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.
  7. Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is established for receivables where recovery is considered uncertain.
  8. Contingent liabilities – Contingent liabilities are potential liabilities which 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 future-oriented financial statements.
  9. Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $5,000or more are recorded at their acquisition cost. The PSC does not capitalize intangibles. 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:

    Tangible capital assets
    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 or useful life
    Furniture and fixtures 15 years
    Vehicles 6 years
    Leasehold improvements Lesser of 10 years and term of lease
    Leased tangible capital assets Lesser of term and useful life
  10. Measurement uncertainty – The preparation of these future-oriented financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the future-oriented financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Actual results could significantly differ from those estimated.

5. Parliamentary Authorities

The Public Service Commission receives most of its funding through expenditure authorities provided by Parliament. Items recognized in the future-oriented statements of operations and financial position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Public Service Commission 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:

  1. Authorities requested

    Forecast (in thousands of dollars)
      Estimated Results 2012 Planned Results 2013
    Authorities requested:
    Vote 100 - Operating expenditures 110,261 92,712
    Statutory contributions to employee benefit plans - -
    Spending of proceeds from disposal of surplus assets - -
    Refund of previous year revenue - -
    Total Authorites requested 110,261 92,712
    Less: Lapsed appropriations - operating expenditures - -
    Forecast authorities available 110,261 92,712

    Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.
  2. Reconciliation of net cost of operations to requested authorities:

    Forecast (in thousands of dollars)
      Estimated Results 2012 Planned Results 2013
    Net cost of operations 126,337 111,311
    Adjustments for items affecting net cost of operations but not affecting appropriations:
    Services received without charge (20,266) (18,939)
    Amortization of tangible capital assets (3,332) (2,476)
    Gain (loss) on disposal of tangible capital assets (1,574) (1,013)
    Revenue not available for spending 1,526 2,081
    Employee Future Benefits 6,402 1,203
    Vacation and Compensatory Leave (58) (27)
    Total adjustments for items affecting net cost of operations but not affecting appropriations (17,302) (19,171)
    Adjustments for items not affecting net cost of operations but affecting appropriations:
    Acquisitions of tangible capital assets 1,158 622
    Prepaid expenses 67 (49)
    Total adjustments for items not affecting net cost of operations but affecting appropriations 1,225 573
    Forecast current year lapse - -
    Forecast authorities available 110,261 92,712

    Due to rounding, figures may not add up to totals shown.

6. Accounts receivable and advances

The following table presents details of the PSC’s accounts receivable and advances balances:

Forecast (in thousands of dollars)
  Estimated Results 2012 Planned Results 2013
Receivables from other government departments and agencies 1,395 1,152
Receivables from external parties 9 4
Employees advances 6 6
Total 1,410 1,162

7. Tangible capital assets

Forecast (in thousands of dollars)
  2012 2013
  Cost
March 31, 2012 Acquisitions Disposals, write-offs Transfers March 31, 2013 Net book value Net book value
Office equipment 595 200 528 - 267 204 224
Informatics hardware and infrastructure 668 - - - 668 58 25
Software 30,740 1 - 2,136 32,877 6,835 6,746
Furniture and fixtures 1,465 - 1,317 - 148 967 16
Vehicles 30 - - - 30 15 12
Leasehold improvements 1,157 - - - 1,157 528 434
Assets under development 2,689 422 - (2,136) 975 2,689 975
Sub-total 37,344 623 1,845 - 36,122 11,296 8,432
Leased equipment 34 - - - 34 27 24
Total 37,378 623 1,845* - 36,156 11,323 8,456

* The disposal figures will be a result of the planned move of PSC headquarters to Gatineau, QC. No office furniture will be moved. This also includes various office equipment (eg. photocopiers, projectors).

Forecast 2013 (in thousands of dollars)
  Accumulated Amortization
March 31, 2012 Amortization Disposals, write-offs March 31, 2013
Office equipment 391 38 387 42
Informatics hardware and infrastructure 610 33 - 643
Software 23,904 2,226 - 26,130
Furniture and fixtures 498 79 446 131
Vehicles 15 4 - 19
Leasehold improvements 629 93 - 722
Sub-total 26,047 2,473 833 27,687
Leased equipment 7 3 - 10
Total 26,054 2,476 833 27,697

Amortization expense for the year ended March 31, 2013 will be $2,476,487 ($3,329,582 in 2011-2012).

Due to rounding, figures may not add up to totals shown.

8. Accounts payable and accrued liabilities

The following table presents details of the PSC’s accounts payable and accrued liabilities:

Forecast (in thousands of dollars)
  Estimated Results 2012 Planned Results 2013
Accounts payable to other government departments and agencies 1,793 1,779
Accounts payable to external parties 3,664 3,188
Total 5,457 4,967

9. Lease obligation for tangible capital assets

The PSC entered into agreements for photocopier rentals under capital lease with a cost of $28,000 and accumulated amortization at March 31, 2013 is expected to be of $10,000. The obligations for the upcoming years include the following:

Forecast (in thousands of dollars)
  Estimated Results 2012 Planned Results 2013
2013 8 0
2014 6 6
2015 2 2
2016 1 1
2017 and thereafter 1 1
Total future minimum lease payment 18 10
Less: imputed interest (0.68% to 3.33%) (1) (1)
Balance of obligations 17 9

10. Employee benefits

  1. Pension benefits

    The PSC’s eligible 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 the Canada and Quebec Pension Plans benefits and they are indexed to inflation.

    Both the employees and the PSC contribute to the cost of the Plan. The forecast expenses are $11,325,106 in 2011-12 and $9,728,845 in 2012-13, representing approximately 2.00 times the contributions of employees.

    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.
  2. 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 authorities. Information about the severance benefits, estimated as at the date of these statements, is as follows:
Forecast (in thousands of dollars)
  Estimated Results 2012 Planned Results 2013
Accrued benefit obligation, beginning of year 17,367 10,965
Expense for the year (4,513) 681
Expected benefits payments during the year (1,889) (1,884)
Accrued benefit obligation, end of year 10,965 9,762

11. 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.

12. Contingent liabilities

Claims are made against the PSC in the normal course of operations. There are currently claims outstanding, none of which are expected to result in payment.

13. Contingent obligations

The nature of the PSC’s activities can result in some large multi-year contracts and obligations whereby the PSC’s 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:

Forecast (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

14. 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 2012-2013, the PSC is expected to incur expenses of $36,597,000 ($38,346,000 in 2011-2012) and earn revenues of $16,064,000 ($12,000,000 in 2011-2012) 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 15.

15. Services provided without charge by other government departments

During the year the PSC receives services without charge from certain common service organizations, related to accommodation, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in the PSC's future-oriented statement of operations as follows:

Forecast (in thousands of dollars)
  Estimated Results 2012 Planned Results 2013
Public Works and Government Services Canada - accommodation 11,809 11,464
Treasury Board Secretariat - employer's share of insurance premiums 7,438 6,449
Justice Canada - legal services 785 790
Office of the Auditor General of Canada - audit services 113 116
Human Resources and Social Development Canada - employer's portion of Worker's compensation payments 121 120
Total 20,266 18,939

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 future-oriented statement of operations of the PSC.

16. Segmented Information

The following table presents the forecasted expenses incurred and forecasted 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:

Forecast (in thousands of dollars)
  2012 Total Staffing and Assessment Services Oversight of Integrity in Staffing and Non-Partisanship Appointment Integrity and Political Impartiality Internal Services 2013 Total
Salaries and employee benefits 104,472 37,910 20,477 13,580 24,432 96,399
Professional and special services 11,196 3,519 1,261 623 4,791 10,194
Accommodation 11,809 4,058 1,454 719 5,233 11,464
Transportation and telecommunications 2,637 718 257 127 983 2,085
Amortization of capital assets 3,332 2,226 - - 250 2,476
Informatics, office equipment, furniture and fixtures 1,438 462 166 82 632 1,342
Repair and maintenance 1,509 552 198 98 756 1,604
Rentals 833 261 94 46 358 759
Printing and publications services 470 139 50 25 190 404
Utilities, materials and supplies and other payments 643 229 82 40 313 664
Total Expenses 138,338 50,074 24,039 15,340 37,938 127,392
Revenue 12,001 16,081 - - - 16,081
Net cost of operations 126,337 33,993 24,039 15,340 37,938 111,311

Due to rounding, figures may not add up to totals shown.

17. Transfers to other government departments

Effective November 17, 2011, the PSC transferred responsibility for the Email, Data Centre and Network Services Unit and Support Unit to Shared Services Canada in accordance with Order-in-Council P.C. 2011-1291 to P.C. 1297, including the stewardship responsibility for assets and liabilities. In addition, the 2012 comparative figures have been reclassified on the Future-oriented Statement of Operations to present the expenses of the operations being transferred.