2017–2018 Financial Statements

  1. Statement of Management Responsibility Including Internal Control over Financial Reporting
  2. Statement of Financial Position
  3. Statement of Operations and Departmental Net Financial Position
  4. Statement of Change in Departmental Net Debt
  5. Statement of Cash Flows
  6. Notes to the Financial Statements

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, 2018, and all information contained in these financial statements rests with the management of the Military Grievances External Review Committee (Committee). These financial statements have been prepared by management using the Government of Canada'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 Committee’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Committee’s Departmental Results 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 Committee 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 Committee is subject to periodic Core Control Audits performed by the Office of the Comptroller General and uses the results of such audits to comply with the Treasury Board Policy on Financial Management.

A Core Control Audit was performed in 2015-2016 by the Office of the Comptroller General of Canada (OCG). The Audit Report and related Management Action Plan are posted on the Committee’s web site at https://www.canada.ca/en/military-grievances-external-review/corporate/financial-statements-quarterly-financial-reports.html

The financial statements of the Committee have not been audited.



Original signed by
_____________________________
Christine Guérette, CPA, CGA
Chairperson and CEO
Ottawa, Canada
August 31, 2018


Original signed by
_____________________________
Jean-François Poirier, CPA, CGA
Chief Financial Officer
Ottawa, Canada
August 31, 2018

Statement of Financial Position (Unaudited)

Statement of Financial Position (Unaudited)
As at March 31
(in dollars)
2018 2017
Liabilities
Accounts payable and accrued liabilities (note 4) $530,883 $563,976
Vacation pay and compensatory leave 137,187 161,571
Employee future benefits (note 5) 144,818 200,289
Total net liabilities 812,888 925,836
Financial Assets
Due from Consolidated Revenue Fund 524,246 531,197
Accounts receivable and advances (note 6) 38,196 28,627
Total net financial assets 562,442 559,824
Departmental net debt 250,446 366,012
Non-financial assets
Prepaid expenses 1,931 0
Tangible capital assets (note 7) 966,704 76,287
Total non-financial assets 968,635 76,287
Departmental net financial position $718,189 $(289,725)

Contractual obligations (note 8)

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



Original signed by
_____________________________
Christine Guérette, CPA, CGA
Chairperson and CEO
Ottawa, Canada
August 31, 2018


Original signed by
_____________________________
Jean-François Poirier, CPA, CGA
Chief Financial Officer
Ottawa, Canada
August 31, 2018

Statement of Operations and Departmental Net Financial Position (Unaudited)

Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31
(in dollars)
2018 Planned Results 2018 2017
Expenses
Independent Review of Military Grievances $5,106,000 $4,123,471 $4,319,895
Internal Services 1,887,000 1,864,917 1,994,936
Total Expenses 6,993,000 5,988,388 6,314,831
Revenues
Miscellaneous revenues 0 816 0
Total revenues 0 816 0
Net cost of operations before government funding and transfers 6,993,000 5,987,572 6,314,831
Government funding and transfers
Net cash provided by Government of Canada   6,647,505 6,040,619
Change in due from Consolidated Revenue Fund   (6,951) (78,595)
Services provided without charge by other government departments (note 9)   354,932 365,943
Net cost of operations after government funding and transfers   (1,007,914) (13,136)
Departmental net financial position - Beginning of year   (289,725) (302,861)
Departmental net financial position - End of year   $718,189 $(289,725)

Segmented Information (note 10)

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

Statement of Change in Departmental Net Debt (Unaudited)

Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31
(in dollars)
2018 2017
Net cost of operations after government funding and transfers $(1,007,914) $(13,136)
Change due to tangible capital assets
Acquisition of tangible capital assets 939,039 17,321
Amortization of tangible capital assets (45,603) (40,355)
Proceeds from disposal of tangible capital assets (309) 0
Net (loss) or gain on disposal of tangible capital assets (2,710) 0
Total change due to tangible capital assets 890,417 (23,034)
Change due to prepaid expenses 1,931 0
Net increase (decrease) in departmental net debt  (115,566) (36,170)
Departmental net debt - Beginning of year 366,012 402,182
Departmental net debt - End of year $250,446 $366,012

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

Statement of Cash Flows (Unaudited)

Statement of Cash Flow (Unaudited)
For the Year Ended March 31
(in dollars)
2018 2017
Operating activities
Net cost of operations before government funding and transfers $5,987,572 $6,314,831
Non-cash items:
Amortization of tangible capital assets (45,603) (40,355)
Gain (loss) on disposal of tangible capital assets (2,710) 0
Services provided without charge by other government departments (note 9) (354,932) (365,943)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 9,569 (30,417)
Increase (decrease) in prepaid expenses 1,931 0
Decrease (increase) in accounts payable and accrued liabilities 33,093 110,364
Decrease (increase) in vacation pay and compensatory leave 24,384 (36,955)
Decrease (increase) in employee future benefits 55,471 71,773
Cash used in operating activities 5,708,775 6,023,298
Capital investing activities
Acquisitions of tangible capital assets 939,039 17,321
Proceeds from disposal of tangible capital assets (309) 0
Cash used in capital investing activities 938,730 17,321
Net cash provided by Government of Canada $6,647,505 $6,040,619

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

Notes to the Financial Statements (Unaudited)

For the Year Ended March 31
(in dollars)

1. Authority and objectives

The raison d’être of the Military Grievances External Review Committee (Committee) is to provide an independent and external review of military grievances. Section 29 of the National Defence Act provides a statutory right for an officer or a non-commissioned member who has been aggrieved, to grieve a decision, an act or an omission in the administration of the affairs of the Canadian Armed Forces. The importance of this broad right cannot be overstated since it is, with certain narrow exceptions, the only formal complaint process available to Canadian Armed Forces members.

The Military Grievances External Review Committee is an independent administrative tribunal reporting to Parliament through the Minister of National Defence. The Committee reviews military grievances referred to it pursuant to s. 29 of the National Defence Act and provides findings and recommendations to the Chief of the Defence Staff and the Canadian Armed Forces member who submitted the grievance.

The Committee also has the obligation to deal with all matters as informally and expeditiously as the circumstances and the considerations of fairness permit.

The Committee operates under the following programs:

  • Independent Review of Military Grievances
  • Internal Services

2. Summary of significant accounting policies

These financial statements are prepared using the Committee’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:

  1. Parliamentary authorities
    The Committee is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Committee do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2017-2018 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2017-2018 Departmental Plan.
  2. Net cash provided by Government
    The Committee operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Committee is deposited to the CRF, and all cash disbursements made by the Committee 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 or to the 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 Committee is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. Revenues
    Other revenues are recognized in the period the event giving rise to the revenues occurred.
    Revenues that are non-respendable are not available to discharge the Committee’s liabilities. While the Chairperson and CEO is expected to maintain accounting control, she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as of reduction of the entity’s gross revenues.
  5. Expenses
    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 employer contributions to the health and dental insurance plans are recorded as operating expenses at their carrying value.
  6. Employee future benefits
    1. Pension benefits - Eligible employees participate in the Public Service Pension Plan, a multi-employer pension plan administered by the Government. The Committee’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Committee’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 accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated by employee based on Committee-specific information.
  7. Accounts receivable
    Accounts receivable are initially recorded at cost. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts receivable to amounts that approximate their net recoverable value.
  8. Non-financial assets
    The costs of acquiring equipment and other capital property are capitalized as tangible capital assets and are amortized to expense over the estimated useful lives of the assets, as described in Note 7. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable and intangible assets.
  9. Measurement uncertainty
    The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government’s best estimate of the related amount at the end of the reporting period. 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.
  10. Related party transactions
    Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.
    Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:
    1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
    2. Certain services received on a without charge basis are recorded for the Committee’s financial statement purposes at the carrying amount.

3. Parliamentary authorities

The Committee 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 Committee 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
2018 2017
Net cost of operations before government funding and transfers $5,987,572 $6,314,831
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (45,603) (40,355)
Gain (loss) on disposal of tangible capital assets (2,710) 0
Gain (loss) on disposal of non-capital assets 784 0
Services provided without charge by other government departments (354,932) (365,943)
Decrease (increase) in vacation pay and compensatory leave 24,384 (36,955)
Decrease (increase) in employee future benefits 92,399 71,773
Refunds of prior year expenditures 3,275 22,698
Adjustments to previous years’ payables at year-end 80,706 0
Increase (decrease) in salary overpayments to be recovered not charged to authorities (388) 2,432
Total items affecting net cost of operations but not affecting authorities (202,085) (346,350)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 939,039 17,321
Increase in prepaid expenses 1,931 0
Total for items not affecting net cost of operations but affecting authorities 940,970 17,321
Current year authorities used $6,726,457 $5,985,802


(b) Authorities provided and used
2018 2017
Authorities provided:
Vote 1 - Operating expenditures $7,183,457 $6,467,559
Statutory amounts 546,639 602,252
Less:
Lapsed: Operating (1,003,639) (1,084,009)
Current year authorities used $6,726,457 $5,985,802

4. Accounts payable and accrued liabilities

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

Accounts payable and accrued liabilities
  2018 2017
Accounts payable – Other government departments and agencies $58,596 $31,553
Accounts payable – External parties 173,735 153,705
Total accounts payable 232,331 185,258
Accrued liabilities 298,552 378,718
Total accounts payable and accrued liabilities $530,883 $563,976

5. Employee future benefits

  1. Pension benefits

    The Committee’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/Québec Pension Plan benefits and they are indexed to inflation.

    Both the employees and the Committee 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 2017-2018 expense amounts to $371,517 ($419,589 in 2016-2017). For Group 1 members, the expense represents approximately 1.01 times (1.12 times in 2016-2017) the employee contributions and, for Group 2 members, approximately 1.00 time (1.08 times in 2016-2017) the employee contributions.

    The Committee’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan’s sponsor.
  2. Severance benefits

    Severance benefits provided to the Committee’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. By March 31, 2018, substantially all settlements for immediate cash out were completed. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

    The changes in the obligations during the year were as follows:
Severance benefits
  2018 2017
Accrued benefit obligation - Beginning of year $200,289 $272,062
Expense for the year (18,068) (59,964)
Benefits paid during the year (37,403) (11,809)
Accrued benefit obligation - End of year $144,818 $200,289

6. Accounts receivable and advances

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

Accounts receivable and advances
  2018 2017
Receivables – Other government departments and agencies $38,140 $26,195
Receivables – External parties 56 2,432
Net accounts receivable $38,196 $28,627

7. Tangible capital assets

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
Machinery and equipment 10 years
Informatics hardware 3 to 5 years
Informatics software 3 years
Other equipment 10 years
Assets under construction Once in service, in accordance with asset type

Assets under construction are recorded in the applicable asset class in the year they are put into service and are not amortized until they are put into service.

Tangible capital assets
  Cost Accumulated Amortization Net Book Value
Capital Asset Class Opening Balance Acquisitions Disposals and Write-Offs Closing Balance Opening balance Amortization Disposals and Write-Offs Closing Balance 2018 2017
Machinery and equipment $17,321 $0 $0 $17,321 $0 $1,732 $0 $1,732 $15,589 $17,321
Informatics hardware 425,553 247,435 187,475 485,513 400,130 29,173 187,475 241,828 243,685 25,423
Informatics software 118,256 0 30,296 87,960 104,937 9,770 30,296 84,411 3,549 13,319
Other equipment 55,314 37,700 24,147 68,867 35,090 4,928 21,128 18,890 49,977 20,224
Assets under construction 0 653,904 0 653,904 0 0 0 0 653,904 0
Total $616,444 $939,039 $241,918 $1,313,565 $540,157 $45,603 $238,899 $346,861 $966,704 $76,287

8. Contractual obligations

The nature of the Committee’s activities may result in some large multi-year contracts and obligations whereby the Committee will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

  2019 2020 2021 2022 2023 2024 and subsequent Total
Operating lease $397,909 $397,909 $397,909 $397,909 $397,909 $1,160,568 $3,150,113

9. Related party transactions

The Committee is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual.

The Committee enters into transactions with these entities in the normal course of business and on normal trade terms.

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

During the year, the Committee received services without charge from certain common service organizations, related to the employer’s contribution to the health and dental insurance plans. These services provided without charge have been recorded at the carrying value in the Committee’s Statement of Operations and Departmental Net Financial Position as follows:

Common services provided without charge by other government departments
  2018 2017
Employer’s contribution to the health and dental insurance plans $354,932 $365,943
Total $354,932 $365,943

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 Services and Procurement Canada and audit services provided by the Office of the Auditor General are not included in the Committee’s Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with other government departments and agencies

Other transactions with other government departments and agencies
  2018 2017 Restated
Accounts receivable $38,140 $26,195
Accounts payable 58,596 31,553
Expenses 1,475,529 1,708,341

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

10. Segmented information

Presentation by segment is based on the Committee’s Program Alignment Architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main programs, by major object of expense and by major type of revenue. The segment results for the period are as follows:

Segmented information
Independent Review of Military Grievances Internal Services 2018 Total 2017 Total
Operating expenses
Salaries and employee benefits $3,391,016 $1,168,735 $4,559,751 $4,843,123
Rentals 446,479 238,186 684,665 697,323
Professional and special services 199,475 307,665 507,140 601,914
Acquisition of non-capital assets 20,246 74,995 95,241 15,622
Transportation and communications 40,069 12,009 52,078 40,973
Amortization of tangible capital assets 13,502 32,101 45,603 40,355
Information 5,920 17,843 23,763 53,634
Repair and maintenance 2,500 7,460 9,960 9,765
Utilities, materials and supplies 3,859 2,595 6,454 7,431
Other 405 3,328 3,733 4,691
Total expenses 4,123,471 1,864,917 5,988,388 6,314,831
Revenues
Miscellaneous revenues 0 816 816 0
Total revenues 0 816 816 0
Net cost of operations $4,123,471 $1,864,101 $5,987,572 $6,314,831
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