Financial Statements (Unaudited) 2015-2016

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, 2016 and all information contained in these statements rests with the management of the Parole Board of Canada (PBC). 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 PBC’s financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the PBC’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 Actand 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; and through communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the PBC 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 PBC 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 Internal Control.

A Core Control Audit was performed in 2011-2012 by the Office of the Comptroller General of Canada (OCG). The Audit Report and related Management Action Plan are posted on the PBC website at http://www.pbc-clcc.gc.ca/rprts/rprt-eng.shtml.

The financial statements of the PBC have not been audited.

Harvey Cenaiko
Chairperson

Cathy Gaudet, CPA, CA
Chief Financial Officer

Ottawa, Canada
August 3, 2016

Statement of Financial Position (Unaudited)
As at March 31


(in thousands of dollars)
  2016   2015
         
Liabilities        
Accounts payable and accrued liabilities (note 4) $ 4,137 $ 3,814
Vacation pay and compensatory leave   1,538   1,538
Employee future benefits (note 5)   2,174   2,285
Total liabilities   7,849   7,637
         
Financial assets        
Due from Consolidated Revenue Fund   4,128   3,807
Accounts receivable and advances (note 6)   329   583
Total gross financial assets   4,457   4,390
         
Financial assets held on behalf of Government        
Accounts receivable and advances (note 6)   (168)   (200)
Total financial assets held on behalf of Government   (168)   (200)
Total net financial assets   4,289   4,190
Departmental net debt   3,560   3,447
         
Non-financial assets        
Prepaid expenses   129   112
Tangible capital assets (note 7)   1,650   2,062
Total non-financial assets   1,779   2,174
Departmental net financial position $ (1,781) $ (1,273)

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

Original signed by 
Harvey Cenaiko
Chairperson

Cathy Gaudet, CPA, CA
Chief Financial Officer

Ottawa, Canada
August 3, 2016

Statement of Operations and Departmental Net Financial Position (Unaudited)
For the Year Ended March 31


(in thousands of dollars)
  2016   2016   2015
    Planned Results        
Expenses            
Conditional release decisions $ 41,623 $ 40,489 $ 40,828
Conditional release openness and accountability   5,307   4,397   6,411
Record suspension decisions and clemency recommendations   6,137   5,101   7,221
Internal services   7,424   8,334   5,831
Total expenses   60,491   58,321   60,291
             
Revenues            
Regulatory fees   6,310   5,612   5,701
Miscellaneous revenues   -   15   23
Revenues earned on behalf of Government   (1,610)   (1,448)   (1,482)
Total revenues   4,700   4,179   4,242
Net cost of operations before government funding and transfers   55,791   54,142   56,049
             
Government funding and transfers            
Net cash provided by Government       45,595   49,464
Change in due from Consolidated Revenue Fund       321   485
Services provided without charge by other government departments (note 8a)       7,660   7,389
Transfer of the transition payments for implementing salary payments in arrears (note 10)       (9)   (1,317)
Capital Assets Adjustment (note 7)       67   -
Net cost of operations after government funding and transfers       508   28
Departmental net financial position – Beginning of year       (1,273)   (1,245)
Departmental net financial position – End of year     $ (1,781) $ (1,273)

Segmented information (note 9)

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

Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31


(in thousands of dollars)
      2016   2015
             
Net cost of operations after government funding and transfers     $ 508 $ 28
Change due to tangible capital assets            
Acquisition of tangible capital assets       326   977
Amortization of tangible capital assets       (805)   (539)
Proceeds from disposal of tangible capital assets       (8)   (22)
Gain on disposal of tangible capital assets       8   15
Capital Assets Adjustment (note 7)       67   -
Total change due to tangible capital assets       (412)   431
Change due to prepaid expenses       17   (4)
Net increase (decrease) in departmental net debt       113   455
Departmental net debt – Beginning of year       3,447   2,992
Departmental net debt – End of year     $ 3,560 $ 3,447
             

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

Statement of Cash Flow (Unaudited)
For the Year Ended March 31


(in thousands of dollars)
  2016   2015
         
Operating activities        
Net cost of operations before government funding and transfers $ 54,142 $ 56,049
Non cash items:        
Services provided without charge by other government departments (note 8a)   (7,660)   (7,389)
Amortization of tangible capital assets   (805)   (539)
Gain on disposal of tangible capital assets   8   15
Transition payments for implementing salary payments in arrears (note 10)   9   1,317
Variations in Statement of Financial Position:        
Decrease in net accounts receivable and advances   (222)   (10)
Increase (decrease) in prepaid expenses   17   (4)
Increase in accounts payable and accrued liabilities   (323)   (484)
Decrease in vacation pay and compensatory leave   -   121
Decrease (increase) in employee future benefits   111   (567)
Cash used in operating activities   45,277   48,509
Capital investing activities        
Acquisitions of tangible capital assets   326   977
Proceeds from disposal of tangible capital assets   (8)   (22)
Cash used in capital investing activities   318   955
Net cash provided by Government of Canada $ 45,595 $ 49,464

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

1. Authority and Objectives

The Parole Board of Canada (PBC or “the Board”) is an agency within the Public Safety Portfolio.

The Board is an independent administrative tribunal that has exclusive jurisdiction and absolute discretion under the Corrections and Conditional Release Act (CCRA) to grant, cancel, terminate or revoke day parole and full parole and authorize or approve temporary absences.  The Board can on referral terminate or revoke statutory release.

The Board has exclusive jurisdiction and absolute discretion to order, refuse to order or revoke a record suspension under the Criminal Records Act (CRA).  In addition, the PBC is authorized to modify or remove driving prohibitions under Section 109 and to investigate Royal Prerogative of Mercy (RPM) requests under Section 110 of the CCRA. The Board also provides recommendations on clemency to the Minister of Public Safety and Emergency Preparedness.

The PBC may also order (on referral by CSC) that certain offenders be held in custody until the end of their sentence. This is called detention during the period of statutory release. Furthermore, the Board makes conditional release decisions for federal offenders, those serving sentences of two years or more, and for offenders serving sentences of less than two years in provinces and territories that do not have their own parole boards. Only the provinces of Ontario and Quebec currently have their own parole boards, which make parole decisions for provincial offenders. The PBC is also responsible for imposing, modifying or removing release conditions on temporary absences, day paroles, full paroles, statutory releases and long-term supervision orders.

The Board has legislated responsibilities related to openness and accountability, which are the provision of information and assistance to victims of crime, observers at hearings, access to the PBC’s decision registry, and delivery of a program of public information. The Board has one strategic outcome: Conditional release and record suspension decisions and decision processes that safeguard Canadian communities. This strategic outcome is the cornerstone of the Board’s public accountability and reporting of results.

The Board has four programs: Conditional release decisions, Conditional release openness and accountability, Record suspension decisions and clemency recommendations and Internal services. Further details on the Board’s authority, mandate and programs may be found in the PBC’s Departmental Performance Report.

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:

  1. Parliamentary authorities – the Board is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Board 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 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 2015-16 Report on Plans and Priorities. 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 2015-16 Report on Plans and Priorities.
  2. Net Cash Provided by Government – The Board operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Board is deposited to the CRF and all cash disbursements made by the Board 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 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 Board is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. Revenues – Revenues are recorded on an accrual basis:

    Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

    Other 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 Board’s liabilities. While the Chairperson as Deputy Head 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.
  5. 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, employer contributions to the health and dental insurance plans, legal services and workers’ compensation are recorded as operating expenses at their estimated cost.
  6. Employee future benefits:

    1. Pension benefits: Eligible employees participate in the Public Service Superannuation Plan, a multiemployer pension plan administered by the Government. The Board’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Board’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: 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.
  7. Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts receivable 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 if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
  9. Tangible capital assets – All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost. The Board 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
Machinery and equipment 3 to 5 years
Other equipment (including furniture) 15 years
Motor vehicles 7 years
Leasehold improvements Lesser of the remaining term of lease or useful life of the improvement

  1. 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 Board 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 Board has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

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

(in thousands of dollars)
2016 2015
Net cost of operations before government funding and transfers $ 54,142 $ 56,049
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments (7,660) (7,389)
Decrease (increase) in employee future benefits 111 (567)
Amortization of tangible capital assets (805) (539)
Prepaid expenses previously charged to authorities (104) (144)
Decrease (increase) in vacation pay and compensatory leave - 121
Net Gain (loss) on disposal of tangible capital assets - (3)
Capital Assets Adjustment 67 -
Refunds of prior years’ expenditures 74 160
Other - 1
Total items affecting net cost of operations but not affecting authorities (8,317) (8,360)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 326 977
Transition payments for implementing salary payments in arrears 9 1,317
Salary Overpayments 47 -
Temporary Account Advances 3 -
Increase in prepaid expenses 121 140
Total items not affecting net cost of operations but affecting authorities 506 2,434
Current year authorities used $ 46,331 $ 50,123

b) Authorities provided and used


 (in thousands of dollars)
2016 2015
Authorities provided
Vote 1 - Program expenditures $ 42,802 $ 45,467
Statutory amounts 5,962 6,349
Less:
Authorities available for future years (7) (22)
Lapsed: Program expenditures (2,426) (1,671)
Current year authorities used $ (46,331) $ 50,123

4.    Accounts payable and accrued liabilities
The following table presents details of the Board’s accounts payable and accrued liabilities:


(in thousands of dollars)
2016 2015
Accounts payable - Other government departments and agencies $ 819 $ 769
Accounts payable – External parties 11 1
Total accounts payable 830 770
Accrued liabilities 3,307 3,044
Total accounts payable and accrued liabilities $ 4,137 $ 3,814

5. Employee future benefits

(a)  Pension benefits

The Board’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 Board contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Canada’s 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 1st, 2013. Each group has a distinct contribution rate.

The 2015-16 expense amounts to $4,086,306 ($4,306,574 in 2014-15) For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-15) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-15) the employee contributions.

The Board’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 Board 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:

(in thousands of dollars)   2016   2015
Accrued benefit obligation, beginning of year $ 2,285 $ 1,718
Expense for the year   79   876
Benefits paid during the year   (190)   (309)
Accrued benefit obligation, end of year $ 2,174 $ 2,285

6.    Accounts receivable and advances

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


(in thousands of dollars)
  2016   2015
Receivables – Other government departments and agencies $ 219 $ 488
Receivable – External parties   106   91
Petty cash advances   4   4
Gross accounts receivable $ 329 $ 583
Accounts receivable held on behalf of Government   168   200
Net accounts receivable $ 161 $ 383

7.    Tangible Capital Assets                                                                                                                                                                                                  

(in thousands of dollars)
Cost Accumulated Amortization Net Book Value
Capital Asset Class Opening balance Acquisitions Disposal and write-offs Adjustments 1 Other 2 Closing balance Opening balance Amortization Disposal and write-offs Closing balance 2016 2015
Machinery & equipment $353 - - $15 - $368 $87 $99 - $186 $182 $266
Other equipment 431 23 - - 67 521 274 30 - 304 217 157
Motor vehicles 647 - 31 - - 616 444 70 31 483 133 203
Leasehold improvements 2,707 176 - - - 2,883 1,286 606 - 1,892 991 1,421
Assets under construction 15 127 - (15) - 127 - - - - 127 15
Total $4,153 $326 $31 - $67 $4,515 $2,091 $805 $31 $2,865 $1,650 $2,062

1. Adjustments include videoconference equipment under construction in 2014-15 that was transferred to machinery & equipment upon completion

2. The $67K represents an asset that was not capitalized in 2014-15

8. Related party transactions

The Board is related as a result of common ownership to all Government departments, agencies and Crown Corporations. The Board enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Board 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 Board received 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 Board's Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars) 2016 2015
Accommodation $ 4,403 $ 4,170
Employer’s contribution to the health and dental insurance plans 2,895 2,916
Legal services 359 300
Workers’ compensation 3 3
Total $ 7,660 $ 7,389

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 Board's Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with related parties:

(in thousands of dollars) 2016 2015
Expenses – Other government departments and agencies $ 8,563 $ 9,368

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


9. Segmented Information

Presentation by segment is based on the Board’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:

Operating expenses
 (in thousands of dollars)
Conditional Release Decisions Conditional Release Openness &
Accountability
Record Suspension Decisions &
Clemency Recommendation
Internal Services 2016 2015
Salaries and employee benefits $32,293 $3,835 $4,398 $6,038 $46,564 $48,360
Accommodation 3,117 361 367 558 4,403 4,356
Professional and special services 2,006 38 206 894 3,144 3,481
Travel 1,387 118 12 102 1,619 1,542
Utilities, materials and supplies 565 3 14 30 612 637
Amortization of tangible capital assets 542 - - 263 805 539
Relocation 43 - 5 - 48 255
Communication services 206 5 8 147 366 371
Information services 70 - 10 222 302 205
Postage, freight, express, and cartage 116 5 61 35 217 297
Rentals 79 6 17 19 121 121
Other 65 26 3 26 120 127
Total Expenses $ 40,489 $ 4,397 $ 5,101 $ 8,334 $ 58,321 $ 60,291
Regulatory fees - - 5,612 - 5,612 5,701
Miscellaneous revenues 7 - 7 1 15 23
Revenues earned on behalf of Government (7) - (1,440) (1) (1,448) (1,482)
Total Revenues - - $ 4,179 - $ 4,179 $ 4,242
Net cost of operations before government funding and transfers $ 40,489 $ 4,397 $ 922 $ 8,334 $ 54,142 $ 56,049

10.  Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. Employees that were on leave without pay when the initial one-time transition payments were issued will receive the transition payment shortly after their return to work from their leave without pay. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. However, it did result in the use of additional spending authorities by the Department. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

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