Financial Statements (Unaudited) 2019-2020

From: Parole Board of Canada

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, 2020 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 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 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 Financial Management.

A Core Control Audit was performed in 2011-12 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.

Jennifer Oades
Chairperson

 

Ottawa, Canada

Anik Lapointe, CPA, CGA
Chief Financial Officer

Statement of Financial Position (Unaudited) as at March 31

(in thousands of dollars)   2020   2019
Liabilities
     Accounts payable and accrued liabilities (note 4) $ 5,334 $ 7,353
     Vacation pay and compensatory leave   1,553   1,626
     Employee future benefits (note 5)   1,306   1,295
Total liabilities   8,193   10,274
 
Financial assets
     Due from Consolidated Revenue Fund   5,309   7,279
     Accounts receivable and advances (note 6)   1,151   861
Total gross financial assets   6,460   8,140
 
Financial assets held on behalf of Government
     Accounts receivable and advances (note 6)   (1,151)   (861)
Total financial assets held on behalf of Government   (1,151)   (861)
Total net financial assets   5,309   7,279
Departmental net debt   2,884   2,995
 
Non-financial assets
     Prepaid expenses   21   22
     Tangible capital assets (note 7)   2,197   2,845
Total non-financial assets   2,218   2,867
Departmental net financial position $ (666) $ (128)

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

Jennifer Oades
Chairperson

Ottawa, Canada

Anik Lapointe, CPA, CGA
Chief Financial Officer

Statement of Operations and Departmental Net Financial Position (Unaudited)
For the year ended March 31

(in thousands of dollars)   2020   2020   2019
    Planned Results        
Expenses
Conditional release decisions $ 45,945 $ 44,581 $ 44,106
Conditional release openness and accountability   4,770   4,780   4,955
Record suspension decisions and clemency recommendations   7,144   8,223   6,824
Internal services   9,250   9,528   8,634
Total expenses   67,109   67,112   64,519
 
Revenues
Regulatory fees   7,579   6,007   6,659
Miscellaneous revenues   -   17   16
Revenues earned on behalf of Government   (1,934)   (1,550)   (1,717)
Total revenues

 

5,645

 

4,474

 

4,958

Net cost of operations before government funding and transfers   61,464   62,638   59,561
 
Government funding and transfers
Net cash provided by Government       52,643   46,495
Change in due from Consolidated Revenue Fund       (1,970)   3,127
Services provided without charge by other government departments (note 8a)       11,427   10,837
Net cost of operations after government funding and transfers       538   (898)
Departmental net financial position – Beginning of year       (128)   (1,026)
Departmental net financial position – End of year     $ (666) $ (128)

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)       2020   2019
 

Net cost of operations after government funding and transfers

    $ 538 $ (898)
Change due to tangible capital assets

Acquisition of tangible capital assets

      165   1,004
Amortization of tangible capital assets       (813)   (502)
Proceeds from disposal of tangible capital assets       (17)   (14)
Gain (loss) on disposal of tangible capital assets       17   14
Total change due to tangible capital assets       (648)   502
Change due to prepaid expenses       (1)   (85)
Net increase (decrease) in departmental net debt       (106)   (481)
Departmental net debt – Beginning of year       2,995   3,476
Departmental net debt – End of year     $ 2,889 $ 2,995

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)   2020   2019
 
Operating activities
   Net cost of operations before government funding and transfers $ 62,638 $ 59,561
   Non cash items:        
     Services provided without charge by other government departments (note 8a)   (11,427)   (10,837)
     Amortization of tangible capital assets   (813)   (502)
     Gain (loss) on disposal of tangible capital assets   17   14
   Variations in Statement of Financial Position:
     Increase in accounts payable and accrued liabilities   2,019   (2,821)
     Decrease in prepaid expenses   (1)   (85)
     Decrease in accounts receivable and advances   -   -
     Decrease (increase) in vacation pay and compensatory leave   73   110
     Decrease in employee future benefits   (11)   65
Cash used in operating activities   52,495   45,505
Capital investing activities
     Acquisitions of tangible capital assets   165   1,004
     Proceeds from disposal of tangible capital assets   (17)   (14)
Cash used in capital investing activities   148   990
Net cash provided by Government of Canada $ 52,643 $ 46,495

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

1. Authority and Objectives

As an independent administrative tribunal, the Parole Board of Canada (PBC ) contributes to keeping Canadians safe by making timely conditional release, record suspension, and expungement decisions and clemency recommendations, in an open and accountable manner, while respecting the rights and dignity of both offenders and victims, in accordance with its statutory responsibilities and authorities. The legal authority under which the PBC operates includes the Corrections and Conditional Release Act and its Regulations, the Criminal Records Act and its Regulations, Expungement of Historically Unjust Convictions Act, the Letters Patent, the Criminal Code, the Canadian Charter of Rights and Freedoms, and other legislation.

The PBC ’s core responsibilities are:

2. Summary of Significant Accounting Policies

These financial statements are 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 PBC is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the PBC 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 2019-20 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 2019-20 Departmental Plan.
  2. Net Cash Provided by Government
    The PBC operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the PBC is deposited to the CRF and all cash disbursements made by the PBC 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 PBC is entitled to draw from the CRF without further authorities to discharge its liabilities.
  4. Revenues
    Revenues from regulatory fees are recognized in the accounts based on the services provided in the year. 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 department’s liabilities. While the Chairperson 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 in 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 accommodation, information technology services, employer contributions to the health and dental insurance plans, legal services and workers’ compensation are recorded as operating expenses at their carrying value.
  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 PBC ’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The PBC ’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 using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
  7. Accounts and loans receivable
    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. Non-financial assets
    All tangible capital assets and leasehold improvements having an initial cost of $5,000 or more are recorded at their acquisition cost.  
  9. Contingent liabilities
    Contingent liabilities, including the allowance for guarantees, are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense recorded to other expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

    For guarantees, an allowance is recorded when it is determined that a loss is likely and the amount of the allowance is estimated taking into consideration the nature of the guarantee, loss experience and current conditions. The allowance is reviewed on an ongoing basis and changes in the allowance are recorded as expenses in the year they become known.
  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 and accompanying notes at March 31. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. 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.

3. Parliamentary authorities

The PBC 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 PBC 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)   2020   2019
 
Net cost of operations before government funding and transfers $ 62,638 $ 59,561
Adjustments for items affecting net cost of operations but not affecting authorities:
    Services provided without charge by other government departments   (11,427)  

(10,837)

    Amortization of tangible capital assets   (813)   (502)
    Refunds of prior years’ expenditures   544   291
    Decrease in vacation pay and compensatory leave   73   110
    Decrease (increase) in employee future benefits   (11)   64
    Gain on disposal of tangible capital assets   17   14
    Other   -   1
Total items affecting net cost of operations but not affecting authorities   (11,617)   (10,859)
Adjustments for items not affecting net cost of operations but affecting authorities:
    Acquisitions of tangible capital assets   165   1,004
    Receivables for salary overpayments and other advances   321   148
    Decrease in prepaid expenses   (1)   (85)
    Proceeds from disposal of tangible capital assets   (17)   (14)
Total items not affecting net cost of operations but affecting authorities   468   1,053
Current year authorities used $ 51,489 $ 49,755

b) Authorities provided and used

 (in thousands of dollars)   2020   2019
 
Authorities provided:        
    Vote 1 - Progream expenditures $ 45,981   45,689
    Statutory amounts   6,151   5,714
Less:
    Lapsed: Program expenditures   165   1,004
Current year authorities used $ 51,489 $ 49,755

4.    Accounts payable and accrued liabilities

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

 (in thousands of dollars)   2020   2019
 
Accounts payable - Other government departments and agencies $ 1,228 $ 1,220
Accounts payable - External parties   292   777
Total accounts payable   1,520   1,997
Accrued liabillities   3,814   5,356
Total accounts payable and accrued liabilities $ 5,334 $ 7,353

5.    Employee future benefits

(a)  Pension benefits

The PBC ’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 PBC 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 2019-20 expense amounts to $4,238,875 ($3,972,718 in 2018-19). For Group 1 members, the expense represents approximately 1.01 times (1.01 times in 2018-19) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2018-19) the employee contributions.

The PBC ’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

Severance benefits provided to the PBC ’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, 2015, 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:

 (in thousands of dollars)   2020   2019
 
Accrued benefit obligation - Beginng of year $ 1,295 $ 1,360
Expense for the year   104   67
Benefits paid during the year   (93)   (1320
Accrued benefit obligation - End of year $ 1,306 $ 1,295

6.    Accounts receivable and advances

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

 (in thousands of dollars)   2020   2019
 
Receivable - Other government departments and agencies $ 335 $ 237
Receivable - External parties   28   24
Employee advances   788   600
Gross accounts receivable $ 1,151 $ 861
Accounts receivable held on behalf of Government   (1,151)   (861)
Net accounts receivable $ - $ -

7.    Tangible Capital Assets

Amortization of tangible capital assets is calculated 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
Software 5 years
Other equipment (including furniture) 15 years
Motor vehicles 7 years
Leasehold improvements Over the useful life of the improvement or the lease term, whichever is shorter
Assets under construction Once in service, in accordance with asset type

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

  Cost   Accumulated Amortization   Net Book Value
Capital Asset Class Opening balance Acquisitions Other Closing Balance   Opening balance Amortization

Disposal
and
write-offs

Closing balance   2020 2019
Machinery & equipment $ 424 $ - $ - $ 424   $ 389 $ 14 $ - $ 403   $ 21 $ 35
Software   1,557   -   314   1,871     986   327   -   1,313     558   571
Other equipment   430   -   -   430     334   28   -   362     68   96
Motor vehicles   669   55   -   724     574   15   -   589     135   96
Leasehold improvements   4,428   -   320   4,748     3,014   429   -   3,443     1,305   1,414
Assets under construction - IT   -   110   -   110     -   -   -   -     110   -
Assets under construction - Refit   633   -   (633)   -     -   -   -   -     -   633
Total $ 8,141 $ 165 $ - $ 8,307   $ 5,297 $ 813 $ - $ 6,110   $ 2,197 $ 2,845

8.    Related party transactions

The PBC is related as a result of common ownership to all Government departments, agencies and Crown Corporations.

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

During the year, the PBC 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 PBC 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.  Additionally, Correctional Services Canada provides information technology services to PBC since 2008, when the function and funding was transferred to the department.  These services provided without charge have been recorded in the PBC ’s Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)   2020   2019
Accommodation $ 4,262 $ 3,998
Information technology services   3,623   3,472
Employer's contribution to the health and dental insurance plans   3,221   3,062
Legal services   318   302
Workers' compensation   3   3
Total $ 11,427 $ 10,837

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

9.   Segmented information

Presentation by segment is based on the PBC ’s core responsibilities. 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 by the core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

  Conditional Release
Decisions
Conditional Release
Openness & Accountability
Record Suspension
Decisions & Clemency
Recommendations
Internal Services 2020
Total
2019
Total
Operating expenses   (in thousands of dollars)
Salaries and employee benefits $ 34,512 $ 4,014 $ 6,584 $ 6,790 $ 51,900 $ 50,328
Professional and special services   4,144   290   964   1,199   6,597   6,152
Accommodation   2,844   333   539   546   4,262   3,998
Travel   1,645   115   21   102   1,883   1,873
Amortization of tangible capital assets   696   -   -   117   813   502
Utilities,materials and supplies   206   2   20   401   629   612

Communication services

  200   20   3   109   332   346
Rentals   68   -   10   177   255   161
Postage, freight, express, and cartage   50   -   69   30   149   145
Relocation   126   -   -   (3)   123   340
Information services   38   1   10   48   97   62
Other   52   5   3   12   72   -
Total operating expenses   44,581   4,780   8,223   9,528   67,112   64,519
Revenues
Regulatory fees   -   -   6,007   -   6,007   6,659
Miscellaneous revenues   -   -   -   17   17   16
Revenues earned on behalf of Government   -   -   (1,533)   (17)   (1,550)   (1,717)
Total revenues   -   -   4,474   -   4,474   4,958
Net cost from continuing operations $ 44,581 $ 4,780 $ 3,749 $ 9,528 $ 62,638 $ 59,561
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