Future-Oriented Financial Statements – March 31, 2014

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Public Service Commission

Statement of Management Responsibility

Responsibility for the compilation, content and presentation of the accompanying future-oriented financial information for the year ending March 31, 2014, rests with organizational 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 Public Service Commission'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 on 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 organizational 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
December 21, 2012

Future Oriented Statement of Financial Position (Unaudited)

At March 31 (in thousands of dollars)
2013 2014
Liabilities
Accounts payable and accrued liabilities (Note 6) 4,443 5,300
Vacation pay and compensatory leave 3,687 3,496
Employee future benefits (Note 7) 9,585 6,239
Total Liabilities 17,715 15,035
Financial Assets
Due from Consolidated Revenue Fund 2,537 3,283
Accounts receivable and advances (Note 8) 1,648 1,696
Total Financial Assets 4,185 4,979
Net Debt 13,530 10,056
Non-financial Assets
Prepaid expenses 267 250
Tangible capital assets and leased tangible capital assets (Note 9) 12,916 13,177
Total Non-financial Assets 13,183 13,427
Net Financial Position (347) 3,371

Information for the year ending March 31, 2013, includes actual amounts from April 1 to October 31, 2012. The information for the remainder of fiscal year 2012-13 and for fiscal year 2013-14 is based on estimates.

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 and Net Financial Position (Unaudited)

For the year ended March 31
(in thousands of dollars)
2013 2014
Expenses
Staffing system integrity and political impartiality 20,639 16,216
Oversight of integrity in staffing and of non-partisanship 24,400 23,430
Staffing services and assessment 45,157 47,135
Internal services 41,125 42,914
Total Expenses 131,321 129,697
Revenues 15,361 16,346
Net cost of operations before government funding 115,960 113,351
Government funding
Net cash provided by government 95,615 94,055
Change in due from the Consolidated Revenue Fund (2,541) 746
Services provided without charge by Other Government Departments (Note 10) 24,891 22,268
Net cost of operations after government funding (2,005) (3,718)
Net Financial Position – Beginning of Year (2,352) (347)
Net Financial Position – End of Year (347) 3,371

Information for the year ending March 31, 2013, includes actual amounts from April 1 to October 31, 2012. The information for the remainder of fiscal year 2012-13 and for fiscal year 2013-14 is based on estimates.

Segmented information (Note 11)

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 Change in Net Debt (Unaudited)

For the year ended March 31
(in thousands of dollars)
2013 2014
Net cost of operations after government funding (2,005) (3,718)
Change due to tangible capital assets
Acquisitions of tangible capital assets 4,151 4,151
Amortization of tangible capital assets (3,890) (3,890)
Total Change due to Tangible Capital Assets 261 261
Total Change due to Prepaid Expenses (94) (17)
Net Decrease in Net Debt (1,838) (3,474)
Net Debt – Beginning of Year 15,368 13,530
Net Debt – End of Year 13,530 10,056

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 (Unaudited)

For the year ended March 31
(in thousands of dollars)
2013 2014
Operating Activities
Net cost of operations before government funding 115,960 113,351
Non-cash Items:
Amortization of tangible capital assets (Note 9) (3,890) (3,890)
Services provided without charge by Other Government Departments (Note 10) (24,891) (22,268)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances (17) 48
Decrease prepaid expenses (94) (17)
Decrease in liabilities 4,396 2,680
Cash Used in Operating Activities 91,464 89,904
Capital Investing Activities
Acquisitions of tangible capital assets (Note 9) 4,151 4,151
Cash Used in Capital Investing Activities 4,151 4,151
Net Cash Provided by the Government of Canada 95,615 94,055

Information for the year ending March 31, 2013, includes actual amounts from April 1 to October 31, 2012. The information for the remainder of fiscal year 2012-13 and for fiscal year 2013-14 is based on estimates.

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 (Unaudited)

1. Authority and objectives

The Public Service Commission of Canada (PSC) was established under the Public Service Employment Act (PSEA) and is listed in schedules 1.1 and IV of the Financial Administration Act. The PSC reports independently to Parliament and 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 current 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 PSEA regarding the 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 its recruitment services to meet the needs of a modern and innovative public service. The PSC has four programs that contribute to the achievement of its objectives:

The Staffing System Integrity and Political Impartiality program is focused on independently safeguarding merit and non-partisanship in the federal public service. This program 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, including official languages, the political activities regime and priority administration.

The Oversight of Integrity in Staffing and of Non-partisanship program provides an accountability regime for the implementation of the appointment policy. It also provides a regulatory framework for safeguarding the integrity of public service staffing and ensuring that staffing is free from political influence. This program 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 and the non-partisanship of the public service.

The Staffing Services and Assessment program 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 program also includes delivering staffing services, programs and products to departments and agencies, to Canadians and to public servants.

The Internal Services program enables the PSC to operate more efficiently and effectively. At the PSC, consistent with other government departments and agencies, Internal Services consists of three program sub-groups: governance and management support, comprised of governance, communications and legal services; resource management services, including human resources management, financial management, information management, information technology, travel and other administrative services; and asset management services, consisting of real property, materiel and acquisition services.

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 its Report on Plans and Priorities.

The main assumptions are as follows:

  1. The PSC's activities will remain substantially the same as for the previous year.
  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience and/or estimated business volume changes. The general historical pattern is expected to continue.
  3. Allowances are mainly based on historical experience and trends. The general historical pattern is expected to continue.
  4. Estimated year-end information for 2012-13 is used as the opening position for the 2013-14 planned results.

These assumptions are adopted as at October 31, 2012.

3. Variations and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of 2012-13 and for 2013-14, 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 PSC 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 the following:

  1. The timing and amounts of acquisitions and disposals of property, plant and equipment that may affect gains/losses and amortization expense;
  2. Implementation of new collective agreements;
  3. Economic conditions that may affect the amount of revenue earned;
  4. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year; and
  5. Spending review measures.

Once the Report on Plans and Priorities is presented, the PSC will not be updating the forecasts with 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 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.

The significant accounting policies are as follows:

  1. Parliamentary appropriations
    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 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 the government is the difference between all cash receipts and all cash disbursements, including transactions between organizations of the government.
  3. Amounts due from/to the CRF
    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
    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
    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 organizations 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
    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 organizational obligation to the Plan. Current legislation does not require the PSC to make contributions for any actuarial deficiencies of the Plan.

    Severance benefits:
    Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the government as a whole.
  7. Accounts receivable
    Accounts receivable 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 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 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:
    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 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 differ significantly from those estimated.

5. Parliamentary authorities

The PSC 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 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) Authorities requested

Forecast
(in thousands of dollars)
2013 2014
Authorities requested
Operating Vote 78,804 80,658
Statutory contributions to employee benefit plans 13,842 13,222
Treasury Board funding for severance payouts 2,808 3,346
Authorities Forecasted to be Used 95,453 97,228

b) Reconciliation of net cost of operations to requested authorities: 

Forecast
(in thousands of dollars)
2013 2014
Net Cost of Operations 115,960 113,351
Adjustments for items affecting net cost of operations but not affecting appropriations
Add (Less):
Services provided without charge by Other Government Departments (Note 10) (24,891) (22,268)
Amortization of tangible capital assets (Note 9) (3,890) (3,890)
Revenues not available for spending 1,361 2,346
Decrease in employee severance benefits 2,809 3,347
Decrease (increase) in vacation pay and compensatory leave (47) 191
Total Adjustments Affecting Net Cost (24,658) (20,274)
Adjustments for items not affecting net cost of operations but affecting appropriations
Add (Less):
Acquisitions of tangible capital assets (Note 9) 4,151 4,151
Authorities Forecasted to be Used 95,453 97,228

6. Accounts payable and accrued liabilities

Forecast
(in thousands of dollars)
2013 2014
Accounts payable – Other Government Departments 176 178
Accounts payable – External parties 2,548 3,131
Total Accounts Payable 2,724 3,309
Accrued Liabilities 1,719 1,991
Total Accounts Payable and Accrued Liabilities 4,443 5,300

7. Employee benefits

a) 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% per year of pensionable service times the average of the best 5 consecutive years of earnings. The benefits are integrated with Canada and Quebec Pension Plans benefits, and are indexed to inflation.

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) 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)
2013 2014
Accrued benefit obligation – Beginning of year 12,394 9,585
Forecasted payments (2,809) (3,346)
Accrued Benefit Obligation – End of Year 9,585 6,239

8. Accounts receivable and advances

Forecast
(in thousands of dollars)
2013 2014
Receivables – Other Government Departments 1,613 1,657
Receivables – External parties 29 33
Employee advances 6 6
Total Accounts Receivables and Advances 1,648 1,696

9. Tangible capital assets

Forecast
(in thousands of dollars)
2013 2014
Opening balance 12,655 12,916
Acquisitions of tangible capital assets 4,151 4,151
Less: Current year amortization (3,890) (3,890)
Net BookValue 12,916 13,177

10. 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 the year, the PSC is forecasted to receive the following without charge from certain common service organizations: accommodation; employer’s contribution to the health and dental insurance plans; legal services; workers’ compensation coverage; and information technology services. These services provided without charge have been recorded in the PSC’s Statement of Operations and Net Financial Position as follows:

Forecast
(in thousands of dollars)
2013 2014
Accommodation 12,115 9,963
Employer’s contributions to the health and dental insurance plans 7,000 6,535
Legal services 992 990
Workers’ compensation 76 72
Information technology services (SSC) 4,708 4,708
Total 24,891 22,268

11. Segmented information

Forecast
(in thousands of dollars)
2013 Staffing System Integrity and Political Impartiality Oversight of Integrity in Staffing and of Non-partisanship Staffing Services and Assessment Internal services 2014
Salaries and employee benefits 98,321 13,025 18,658 37,531 25,122 94,336
Professional and special services 12,903 1,257 2,153 2,719 9,841 15,970
Accommodation 12,115 1,719 1,936 3,645 2,662 9,962
Transportation and telecommunications 991 46 127 352 782 1,307
Amortization of capital assets 3,890 7 101 2,067 1,715 3,890
Machinery and equipment 130 26 73 (235) 447 311
Repair and maintenance 142 7 18 50 112 187
Rentals 1,557 72 200 553 1,228 2,053
Printing and publications services 283 13 36 101 223 373
Utilities, materials and supplies 566 26 73 201 447 747
Other payments 425 20 55 151 335 561
Total Expenses 131,323 16,218 23,430 47,135 42,914 129,697
Revenue 15,361 - - 16,346 - 16,346
Net Cost of Operations 115,962 16,218 23,430 30,789 42,914 113,351

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