Financial Statements 2014-2015

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, 2015 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 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; 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.

The financial statements of the PBC have not been audited.

Ottawa, Canada
July 20, 2015

Statement of Financial Position (Unaudited)

As at March 31
(in thousands of dollars)

	2015	2014
Liabilities
Accounts payable and accrued liabilities (note 4)	3,814	3,330
Vacation pay and compensatory leave	1,538	1,659
Employee future benefits (note 5)	2,285	1,718
Total liabilities	7,637	6,707
Financial assets
Due from Consolidated Revenue Fund	3,807	3,322
Accounts receivable and advances (note6)	583	635
Total gross financial assets	4,390	3,957
Financial assets held on behalf of Government
Accounts receivable and advances (note 6)	(200)	(242)
Total financial assets held on behalf of Government	(200)	(242)
Total net financial assets	4,190	3,715
Departmental net debt	3,447	2,992
Non-financial assets
Prepaid expenses	112	116
Tangible capital assets (note 7)	2,062	1,631
Total non-financial assets	2,174	1,747
Departmental net financial position	(1,273)	(1,245)

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

Ottawa, Canada
July 20, 2015

Statement of Operations and Departmental Net Financial Position (Unaudited)

For the Year Ended March 31
(in thousands of dollars)

	2015 Planned Results	2015	2014
Expenses
Conditional release decisions	43,117	40,828	41,075
Conditional release openness and accountability	6,791	6,411	6,290
Record suspension decisions and clemency recommendations	6,620	7,221	8,186
Internal services	6,379	5,831	6,268
Total expenses	62,907	60,291	61,819
Revenues
Regulatory fees	7,572	5,701	6,053
Miscellaneous revenues	–	23	7
Revenues earned on behalf of Government	(1,927)	(1,482)	(1,556)
Total revenues	5,645	4,242	4,504
Net cost of operations before government funding and transfers	57,262	56,049	57,315
Government funding and transfers
Net cash provided by Government		49,464	49,731
Change in due from Consolidated Revenue Fund		485	950
Services provided without charge by other government departments (note 8a)		7,389	7,355
Transfer of the transition payments for implementing salary payments in arrears (note 10)		(1,317)	–
Net cost of operations after government funding and transfers		28	(721)
Departmental net financial position – Beginning of year		(1,245)	(1,966)
Departmental net financial position – End of year		(1,273)	(1,245)

Segmented information (note 9)

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

Statement of Change in Departmental Net Debt (Unaudited)

As at March 31
(in thousands of dollars)

	2015	2014
Net cost of operations after government funding and transfers	28	(721)
Change due to tangible capital assets
Acquisition of tangible capital assets	977	814
Amortization of tangible capital assets	(539)	(456)
Proceeds from disposal of tangible capital assets	(22)	(7)
Gain on disposal of tangible capital assets	15	7
Total change due to tangible capital assets	431	358
Change due to prepaid expenses	(4)	(147)
Net increase (decrease) in departmental net debt	455	(510)
Departmental net debt – Beginning of year	2,992	3,502
Departmental net debt – End of year	3,447	2,992

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)

	2015	2014
Operating activities
Net cost of operations before government funding and transfers	56,049	57,315
Non cash items:
Services provided without charge by other government departments (note 8a)	(7,389)	(7,355)
Amortization of tangible capital assets	(539)	(456)
Gain on disposal of tangible capital assets	15	7
Transition payments for implementing salary payments in arrears (note 10)	1,317	–
Variations in Statement of Financial Position:
Increase (decrease) in net accounts receivable and advances	(10)	338
Decrease in prepaid expenses	(4)	(147)
Increase in accounts payable and accrued liabilities	(484)	(958)
Decrease (increase) in vacation pay and compensatory leave	121	(30)
Decrease (increase) in employee future benefits	(567)	210
Cash used in operating activities	48,509	48,924
Capital investing activities
Acquisitions of tangible capital assets	977	814
Proceeds from disposal of tangible capital assets	(22)	(7)
Cash used in capital investing activities	955	807
Net cash provided by Government of Canada	49,464	49,731

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 a period of 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 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 2014-15 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 2014-15 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. (i) 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. (ii) 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:

10. 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)

	2015	2014
Net cost of operations before government funding and transfers	56,049	57,315
Adjustments for items affecting net cost of operations but not affecting authorities:
Services provided without charge by other government departments	(7,389)	(7,355)
Decrease (increase) in employee future benefits	(567)	210
Amortization of tangible capital assets	(539)	(456)
Prepaid expenses previously charged to authorities	(144)	(227)
Decrease (increase) in vacation pay and compensatory leave	121	(30)
Gain on disposal of tangible capital assets	15	7
Refunds of prior years' expenditures	160	57
Other	5	3
Total items affecting net cost of operations but not affecting authorities	(8,338)	(7,791)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets	977	814
Proceeds from disposal of tangible capital assets	(22)	(7)
Transition payments for implementing salary payments in arrears	1,317	–
Increase in prepaid expenses	140	80
Total items not affecting net cost of operations but affecting authorities	2,412	887
Current year authorities used	50,123	50,411

b) Authorities provided and used
(in thousands of dollars)

	2015	2014
Authorities provided
Vote 1 - Program expenditures	45,467	45,801
Statutory amounts	6,349	6,697
Less:
Authorities available for future years	(22)	(7)
Lapsed: Program expenditures	(1,671)	(2,080)
Current year authorities used	50,123	50,411

4. Accounts payable and accrued liabilities

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

(in thousands of dollars)

	2015	2014
Accounts payable - Other government departments and agencies	770	1,578
Total accounts payable	770	1,578
Accrued liabilities	3,044	1,752
Total accounts payable and accrued liabilities	3,814	3,330

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 1^st, 2013. Each group has a distinct contribution rate.

The 2014-15 expense amounts to $4,306,574 ($4,686,133 in 2013-14). For Group 1 members, the expense represents approximately 1.41 times (1.6 times in 2013-14) the employee contributions and, for Group 2 members, approximately 1.39 times (1.5 times in 2013-14) 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)

	2015	2014
Accrued benefit obligation, beginning of year	1,718	1,928
Expense for the year	876	225
Benefits paid during the year	(309)	(435)
Accrued benefit obligation, end of year	2,285	1,718

6. Accounts receivable and advances

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

(in thousands of dollars)

	2015	2014
Receivables – Other government departments and agencies	488	575
Receivable – External parties	91	56
Petty cash advances	4	4
Gross accounts receivable	583	635
Accounts receivable held on behalf of Government	200	242
Net accounts receivable	383	393

7. Tangible Capital Assets

Cost
(in thousands of dollars)

Capital Asset Class	Opening balance	Acquisitions	Disposal and write-offs	Closing balance
Machinery & equipment	106	267	20	353
Other equipment	424	12	5	431
Motor vehicles	730	–	83	647
Leasehold improvements	2,024	683	–	2,707
Assets under construction	–	15	–	15
Total	3,284	977	108	4,153

Accumulated Amortization
(in thousands of dollars)

Capital Asset Class	Opening balance	Amortization	Disposal and write-offs	Closing balance
Machinery & equipment	73	34	20	87
Other equipment	251	25	2	274
Motor vehicles	428	95	79	444
Leasehold improvements	901	385	–	1,286
Assets under construction	–	–	–	–
Total	1,653	539	101	2,091

Net Book Value
(in thousands of dollars)

Capital Asset Class	2015	2014
Machinery & equipment	266	33
Other equipment	157	173
Motor vehicles	203	302
Leasehold improvements	1,421	1,123
Assets under construction	15	–
Total	2,062	1,631

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)

	2015	2014
Accommodation	4,170	4,019
Employer's contribution to the health and dental insurance plans	2,916	3,016
Legal services	300	318
Workers' compensation	3	2
Total	7,389	7,355

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)

	2015	2014
Expenses – Other government departments and agencies	9,368	9,826

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:

(in thousands of dollars)

Operating expenses	Conditional Release Decisions	Conditional Release Openness & Accountability	Record Suspension Decisions & Clemency Recommendation	Internal Services	2015	2014
Salaries and employee benefits	32,789	5,187	6,007	4,377	48,360	49,637
Accommodation	2,867	452	646	391	4,356	4,329
Professional and special services	2,134	574	387	386	3,481	3,437
Travel	1,375	111	2	54	1,542	1,745
Utilities, materials and supplies	464	21	8	144	637	912
Amortization of tangible capital assets	250	1	–	288	539	456
Relocation	255	–	–	–	255	166
Communication services	233	24	9	105	371	361
Information services	130	33	24	18	205	214
Postage, freight, express, and cartage	183	–	81	33	297	280
Rentals	77	8	17	19	121	152
Tenant Services	–	–	–	–	–	83
Other	71	–	40	16	127	47
Total Expenses	40,828	6,411	7,221	5,831	60,291	61,819
Regulatory fees	(10)	–	5,711	–	5,701	6,053
Miscellaneous revenues	23	–	–	–	23	7
Revenues earned on behalf of Government	(22)	–	(1,460)	–	(1,482)	(1,556)
Total Revenues	(9)	–	4,251	–	4,242	4,504
Net cost of operations before government funding and transfers	40,837	6,411	2,970	5,831	56,049	57,315

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. 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.