Financial Statements (unaudited) 2013-2014

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, 2014, and all information contained in these statements rests with the management of the Commission for Public Complaints Against the RCMP (Commission). 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 Commission's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada and included in the Commission'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 (ICFR) 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 Commission and through conducting an annual risk-based assessment of the effectiveness of the system of ICFR.

The system of ICFR is designed to mitigate risks to a reasonable level based on an on-going process to identify key risks, to assess effectiveness of associated key controls and to make any necessary adjustments.

The Commission is subject to periodic Core Control Audits performed by the Office of the Comptroller General (OCG) and uses the results of such audits to comply with the Treasury Board Policy on Internal Control.

A Core Control Audit was completed in 2011–2012 by the OCG. The Audit Report and related Management Action Plan are posted on the Commission's website.

The financial statements of the Commission have not been audited.

_____________________
Ian McPhail, Q.C.
Chair
Ottawa, Canada
August 27, 2014

_____________________
Helen Banulescu
Chief Financial Officer
Ottawa, Canada
August 27, 2014


Statement of Financial Position (unaudited)

As at March 31
(in dollars)

  2014 2013

The accompanying notes form an integral part of these financial statements

Liabilities    
Accounts payable and accrued liabilities (Note 4) $689,373 $552,435
Vacation pay and compensatory leave 234,527 225,493
Employee future benefits (Note 5) 264,972 377,400
Total Liabilities 1,188,872 1,155,328
Financial assets    
Due from Consolidated Revenue Fund 668,327 552,009
Accounts receivable and advances (Note 6) 100,147 41,391
Total financial assets 768,474 593,400
Departmental Net Debt 420,398 561,927
Non-financial assets    
Tangible capital assets (Note 7) 505,544 551,526
Total non-financial assets 505,544 551,526
Departmental net financial position $85,146 $(10,402)

_____________________
Ian McPhail, Q.C.
Chair
Ottawa, Canada
August 27, 2014

_____________________
Helen Banulescu
Chief Financial Officer
Ottawa, Canada
August 27, 2014


Statement of Operations and Departmental Net Financial Position (unaudited)

For the Year Ended March 31
(in dollars)

  2014
Planned Results
2014 2013

Segmented information (Note 9)

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

Expenses      
Civilian Review of RCMP members' conduct $2,667,078 $4,949,500 $3,789,274
Internal Services 3,809,571 4,940,532 5,620,111
Total expenses 6,476,649 9,890,032 9,409,385
Revenues      
Miscellaneous revenues 5,500 7,359 7,531
Revenues earned on behalf of government (5,500) (7,359) (7,531)
Total revenues - - -
Net cost of operations before government funding and transfers 6,476,649 9,890,032 9,409,385
Government funding and transfers      
Net cash provided by government 5,408,543 8,671,445 7,651,773
Change in due from the Consolidated Revenue Fund 26,025 116,318 298,548
Services provided without charge by other government departments 1,110,000 1,197,817 1,222,764
Net cost of operations after government funding and transfers (67,919) (95,548)   236,300
Departmental net financial position – Beginning of Year 182,349 (10,402) 225,898
Departmental net financial position – End of Year $250,268 $85,146 $(10,402)

Statement of Change in Departmental Net Debt (unaudited)

For the Year Ended March 31
(in dollars)

  2014 2014 2013

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

Net cost of operations after government funding and transfers $(67,919) $(95,548) $236,300
Change due to tangible capital assets      
Acquisition of tangible capital assets 220,000 142,577 27,630
Amortization of tangible capital assets (215,072) (188,558) (179,306)
Total change due to tangible capital assets 4,928 (45,981) (151,676)
Net increase (decrease) in departmental net debt (62,991) (141,529) 84,624
Departmental net debt beginning of year 497,547 561,927 477,303
Departmental net debt end of year $434,556 $420,398 $561,927

Statement of Cash Flows (unaudited)

For the Year Ended March 31
(in dollars)

  2014 2013

The accompanying notes form an integral part of these financial statements

Operating activities    
Net cost of operations before government funding and transfers $9,890,032 $9,409,385
Non-cash items    
Amortization of tangible capital assets (Note 8) (188,558) (179,306)
Services provided without charge by other government  departments (1,197,817) (1,122,764)
Variations in statement of financial position    
Increase (decrease) in accounts receivable and advances 58,756 (14,208)
Decrease (increase) in accounts payable and accrued liabilities (136,938) (299,974)
Decrease (increase) in vacation pay and compensatory leave (9,034) (29,781)
Decrease (increase) in employee future benefits 112,427 (39,390)
Cash used in operating activities 8,528,868 7,624,143
Capital investing activities    
Acquisitions of tangible capital assets 142,577 27,630
Cash used in capital investing activities 142,577 27,630
Net cash provided by Government of Canada $8,671,445 $7,651,773

Notes to the Financial Statements (unaudited)

For the Year Ended March 31

1. Authority and objectives

The Commission for Public Complaints Against the RCMP (Commission) is a federal agency reporting to Parliament that receives and reviews public complaints about the conduct of members of the RCMP in the performance of any duty or function under the Royal Canadian Mounted Police Act (RCMP Act). The Commission is entirely separate from and independent of the RCMP. The mandate of the Commission is set out in Part VII of the RCMP Act and can be summarized as follows:

  • to receive complaints from the public about the conduct of RCMP members;
  • to initiate complaints and examine RCMP conduct when it is in the public interest to do so;
  • to conduct reviews when complainants are not satisfied with the RCMP's handling of their complaints;
  • to hold hearings and conduct investigations; and
  • to report findings and make recommendations.

The Commission has two programs, Civilian review of RCMP members' conduct in the performance of their duties and Internal services. Internal services include all services that support the program, including management and oversight, communications, legal, human resources, financial management, procurement, information management and technology and other administrative services. 

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 Commission is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Commission does 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, the Departmental Net Financial Position and Change in Departmental Net Debt are the amounts reported in the future-oriented financial statements included in the 2013–2014 Report on Plans and Priorities.

(b) Net cash provided by Government

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

(c) Amount due from/to CRF

Amounts due from or 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 Commission 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 Commission's liabilities. While the Chair is expected to maintain accounting control, he 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 the accrual basis:

  • 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 employer contributions to the health and dental insurance plans are recorded as operating expenses at their estimated cost.

(f) Employee future benefits

Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government of Canada. The Commission's contributions to the plan are charged to expenses in the year incurred and represent the Commission's total obligation to the plan. The Commission'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.

Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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.

(g) Accounts receivable and advances

Accounts receivables are stated at the lower of cost and net recoverable value; a valuation allowance is recorded for receivables where recovery is considered uncertain.

(h) 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 Commission does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian reserves and museum collections. 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 4 Years
Computer software 3-5 Years
Leasehold improvements Lesser of the remaining term of the lease or useful life of improvement
Other equipment, including furniture 5 Years

Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

(i) 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 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 Commission receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the 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:

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

  2014
(in dollars)
2013
(in dollars)
Net cost of operations before government funding and transfers $9,890,032 $9,409,385
Adjustments for items affecting net cost of operations but not affecting authorities:    
Amortization of tangible capital assets (Note 8) (188,558) (179,306)
Services provided without charge by other government departments (Note 7) (1,197,817) (1,222,764)
Decrease (increase) in vacation pay and compensatory leave (9,034) (29,781)
Decrease (increase) in employee future benefits 112,428 (39,390)
Refund of prior year expenditures 5,516 28,435
Adjustments to previous years' payables at year-end 34,691 16,792
Total items affecting net cost of operations but not affecting authorities (1,242,775) (1,426,014)
Adjustments for items not affecting net cost of operations but affecting authorities:    
Acquisitions of tangible capital assets (Note 7) 142,577 27,630
Total items not affecting net cost of operations but affecting authorities 142,577 27,630
Current year authorities used 8,789,834 8,011,001

(b) Authorities provided and used:

  2014
(in dollars)
2013
(in dollars)
Authorities provided:    
Program expenditures - Vote 65 9,937,640 7,962,033
Statutory amounts 831,317 827,623
Less:    
Lapsed: Program expenditures (1,439,123) (778,654)
Current year authorities used $8,789,834 $8,011,001

4. Accounts payable and accrued liabilities

The following table presents details of the Commission's accounts payable and accrued liabilities:

  2014
(in dollars)
2013
(in dollars)
Accounts payable to other government departments and agencies $194,337 $309,668
Accounts payable to external parties 443,197 207,871
Total accounts payable 637,534 517,538
Accrued liabilities 51,839 34,896
Total accounts payable and accrued liabilities $689,373 $552,435

5. Employee future benefits

(a) Pension benefits

The Commission's employees participate in the Public Service Pension Plan (the “Plan”), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the Commission contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013.  Each group has a distinct contribution rate.

The 2013-2014 expense amounts to $584,501 ($590,923 in 2012-2013).  For Group 1 members, the expense represents approximately 1.6 times (1.7 times in 2012-2013) the employee contributions and, for Group 2 members, approximately 1.5 times (1.6 times in 2012-2013) the employee contributions.

The Commission'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 Commission provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities.

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. These changes have been reflected in the calculation of the outstanding severance benefit obligation. Information about the severance benefits, measured as at March 31, is as follows:

  2014
(in dollars)
2013
(in dollars)
Accrued benefit obligation, beginning of year $377,400 $338,010
Expense for the year 19,857 245,524
Benefits paid during the year (132,285) (206,134)
Accrued benefit obligation, end of year $264,972 $377,400

6. Accounts receivable and advances

The following table presents details of accounts receivable and advances:

  2014
(in dollars)
2013
Restated
(Note 10)
(in dollars)
Receivables – Other government departments and agencies $99,647 $41,191
Receivables – External parties - -
Employee advances 500 200
Net accounts receivable 100,147 41,391

7. Tangible capital assets
(in dollars)

Cost (in dollars)
Capital asset class Opening balance
Acquisitions Adjustments Closing balance
Computer hardware 66,357 142,577 - 208,934
Computer software 15,569 - - 15,569
Other equipment including furniture 170,436 0 0 170,436
Assets under construction 27,630 - (27,630) -
Leasehold improvements 647,008 - 27,630 674,638
Total $927,000 $142,577 $- $1,069,577
Accumulated Amortization (in dollars)
Capital asset class Opening balance
Amortization Closing balance
Computer hardware 33,036 9,480 42,516
Computer software 9,342 3,114 12,456
Other equipment including furniture 90,125 34,087 124,212
Assets under construction - - -
Leasehold improvements 242,972 141,877 384,849
Total $375,475 $188,558 $564,033
Net book value (in dollars)
Capital asset class 2014 2013
Computer hardware 166,418 33,321
Computer software 3,113 6,227
Other equipment including furniture 46,224 80,311
Assets under construction - 27,630
Leasehold improvements 289,789 404,037
Total $505,544 $551,525

* Adjustments include assets under construction of $27,630 that were transferred to the leasehold improvements upon completion of the assets.

8. Related party transactions

The Commission is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Commission enters into transactions with these entities in the normal course of business and on normal trade terms. In addition, the Commission has an agreement with Public Safety Canada related to the provision of finance, human resources, and information technology and management services. During the year, the Commission received common services which were obtained without charge from other government departments as disclosed below.

(a) Common services provided without charge by other government departments

During the year, the Commission received services without charge from certain common service organizations related to accommodation and 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 Commission's Statement of Operations and Departmental Net Financial Position as follows:

  2014
(in dollars)
2013
(in dollars)
Accommodation $768,023 $766,178
Employer's contribution to the health and dental insurance plans 429,794 456,586
Total $1,197,817 $1,222,764

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 payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General, are not included in the Commission’s Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties

  2014
(in dollars)
2013
(in dollars)

Expenses disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

Accounts receivable – Other government departments and agencies $99,647 $41,191
Accounts payable – Other government departments and agencies 194,337 309,668
Expenses – Other government departments and agencies $630,764 $681,942

9. Segmented information

Presentation by segment is based on the Commission’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 revenue generated for the main programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

Expenses
Operating expenses Civilian review of RCMP members' conduct
2014
(in dollars)
Internal services
2014
(in dollars)
Total
2014
(in dollars)
Total
2013
(in dollars)
Salaries and employee benefits 3 456 541 $ 2 978 757 $ 6 435 298 $ 6 453 765 $
Professional and special services 465 313 794 175 1 259 488 1 175 362
Accommodation 414 195 367 223 781 418 783 627
Repairs 148 492 132 029 280 521 57 940
Travel and relocation 159 619 60 061 219 680 174 433
Equipment 201 227 340 813 542 040 354 636
Communication 39 966 41 733 81 699 69 486
Utilities, material and supplies 36 599 21 715 58 314 82 977
Equipment rentals 26 722 8 935 35 657 68 183
Amortization - 188 558 188 558 179 306
Information 826 6 533 7 359 9 670
Total operating expenses 4 949 500 4 940 532 9 890 032 9 409 385
Revenues
  Civilian review of RCMP members' conduct
2014
(in dollars)
Internal services
2014
(in dollars)
Total
2014
(in dollars)
Total
2013
(in dollars)
Miscellaneous revenues   (7 359) (7 359) (7 531)
Revenue earned on behalf of government   7 359 7 359 7 531
Total revenues   - - -
Net cost of operations before government funding and transfers $4 949,500 $4,940,532 $9,890,032 $9,409,385
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